On Monday, April 22, 2024, the United States Federal Trade Commission (FTC) announced it had moved to block Tapestry, Inc.'s $8.5 billion acquisition of Capri Holdings Limited.
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Tapestry, the holding company that owns the brands Coach and Kate Spade, both known for their upscale, but somewhat affordable handbags and other fashion products, announced its intention to acquire Capri Holdings in August, 2023.
Capri Holdings Ltd owns the luxury fashion house Versace as well as Jimmy Choo, primarily known for its shoes, and–most significantly to the FTC’s case–Michael Kors.
The FTC argues that because Michael Kors, Kate Spade, and Coach collectively hold a dominant share of the 'accessible luxury' handbag market, this deal would effectively end direct competition among them.
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“With the goal to become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry,” said Henry Liu, Director of the FTC’s Bureau of Competition. “This deal threatens to deprive consumers of the competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions.”
In the opinion of the FTC, the merger would “deprive millions of American consumers” of the benefits of the two companies’ competition, such as competition on price, innovation, and advertising.
Yesterday, April 23, 2024, Tapestry’s shares dipped 2.16%, and Capri Holdings slipped slightly more, with a decline of 3.82%.