The Federal Trade Commission is taking legal action to prevent Tapestry from acquiring Capri Holdings for $8.5 billion, arguing that the merger would negatively impact consumers by reducing competition and increasing prices in the affordable luxury sector.
In a filing made on Monday in federal court, the FTC raised concerns about the consolidation of six fashion brands under one entity, including Tapestry's Coach, Kate Spade, and Stuart Weitzman, as well as Capri's Michael Kors, Versace, and Jimmy Choo.
The FTC highlighted the potential consequences of the acquisition on American shoppers who benefit from the competition between Tapestry and Capri, as well as on the 33,000 workers employed by both companies globally.
"Tapestry's pursuit of Capri as part of its strategy to continuously acquire companies poses a threat to competition in the fashion industry," said Henry Liu, director of the FTC's Bureau of Competition. "Consumers could lose out on affordable handbag options, and workers may face challenges such as lower wages and less favorable working conditions."
Despite the FTC's concerns, Tapestry refuted the allegations, claiming that the agency lacks a deep understanding of the market and consumer behavior.
"In response to competitive pressures from various product price points, Tapestry and Capri find themselves in a challenging position. The FTC's decision to pursue this case disregards the current landscape of the $200 billion luxury industry," the company stated in a press release.
Announced in August of 2023, Tapestry revealed its plans to acquire Capri. Together, the two companies achieved over $12 billion in sales during 2022.
