The Federal Trade Commission sued to block Capri Holdings Ltd.’s acquisition. by Tapestry, Inc. for $8.5 billion, claiming the deal would eliminate direct head-to-head brand competition between fashion companies like Coach and Michael Kors in the fashion industry. called affordable luxury handbags arena.
The agency also said Monday that the deal, announced in August 2023, threatens to eliminate the two companies’ incentive to compete for employees and could lower employees’ wages and benefits. The combination of Tapestry and Capri would employ about 33,000 people worldwide, the agency said.
“Aiming to become a serial acquirer, Tapestry seeks to acquire Capri to further solidify its strong position in the fashion industry,” Henry Liu, director of the FTC’s Bureau of Competition, said in a statement.
The move is the latest by the FTC to take a more aggressive stance on antitrust issues.
In February, the FTC sued to block the $24.6 billion merger between grocery giants Kroger and Albertson’s, saying the lack of competition would cause food prices to rise and fall workers’ wages. Supermarket chains announced Monday they would sell more of their stores in an effort to allay the federal government’s concerns.
Kroger and Albertsons announced plans to merge in October 2022. The companies said it was necessary to better compete with Walmart, Amazon and other large competitors.
Tapestry and Capri’s brand portfolio covers a wide range of items from clothing to eyewear to shoes. Tapestry has been on an acquisition spree for several years and already owns Kate Spade New York, Stuart Weitzman and Coach. Capri owns the Versace, Michael Kors and Jimmy Choo brands.
Specifically, Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand are close rivals in the handbag market. The FTC said they continually monitor each handbag brand to determine pricing and performance, and each uses that information to make strategic decisions, including whether to raise or lower prices handbags.
Once completed, the new entity would become the fourth-largest luxury company in the world, with a combined market share of about 5.1% of the luxury goods market, according to research firm GlobalData PLC. In the Americas, the company will become the second largest luxury player behind LVMH, with a combined 6% share of the luxury goods market, GlobalData said.
Capri and Tapestry said they strongly disagree with the FTC’s decision.
“Market realities, which the government ignores, overwhelmingly demonstrate that this transaction will not limit, reduce or coerce competition,” Capri said in a statement posted on its website. “Tapestry and Capri operate in an extremely competitive and highly fragmented global luxury sector. Consumers have hundreds of handbag choices at every price point and across every channel, and the barriers to entry are low. »
Capri said it intends to “vigorously defend this matter in court alongside Tapestry and complete the pending acquisition.” The US FTC is the only regulator that has not approved the transaction.
Tapestry said that “there is no doubt that this is a pro-competition, pro-consumer deal and that the FTC fundamentally misunderstands both the market and how consumers shop.” »
“Tapestry and Capri operate in an extremely competitive and highly fragmented industry alongside hundreds of rival brands, including both established players and new entrants. » said Tapestry in a statement.
NBC Chicago
