The Federal Trade Commission sued to block Tapestry’s $8.5 billion acquisition of Capri Holdings, saying the deal would harm consumers by reducing competition and raising prices in the luxury sector affordable.
The FTC’s federal court filing Monday challenges the proposed deal that would allow a single company to control six fashion brands: Tapestry’s Coach, Kate Spade and Stuart Weitzman and Capri’s Michael Kors, Versace and Jimmy Choo.
The acquisition could negatively impact the millions of U.S. shoppers who now benefit from the direct rivalry between Tapestry and Capri, as well as the approximately 33,000 workers employed by the two companies worldwide, the FTC said.
“Aiming to become a serial acquirer, Tapestry seeks to acquire Capri to further solidify its strong position in the fashion industry,” said Henry Liu, Director of the FTC’s Bureau of Competition. “This deal threatens to deprive consumers of competition for affordable handbags, while hourly workers risk losing the benefits of higher pay and more favorable working conditions.”
Tapestry rejected the FTC’s position, saying the agency doesn’t understand the market or how people shop.
“Ultimately, Tapestry and Capri face competitive pressures from both lower-priced and more expensive products. In bringing this case, the FTC has chosen to ignore the reality of a global luxury industry dynamic and growing by $200 billion,” the company said. in a report.
Tapestry said it would acquire Capri in August 2023. The companies together generated more than $12 billion in sales in 2022.
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