The Federal Trade Commission (FTC) said in a statement on Monday that it has sued to block Tapestry’s $8.5 billion deal to acquire Capri.
If allowed, the fashion deal would bring together six brands: Tapestry’s Coach, Kate Spade, and Stuart Weitzman, and Capri’s Michael Kors, Jimmy Choo, and Versace. According to the agency, such a deal would “eliminate fierce competition” between Tapestry and Capri’s brands.
Currently, the fashion giants compete on various items, including clothing, eyewear, shoes, and handbags.
“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,” said Henry Liu, FTC’s Bureau of Competition director, in a statement.
Moreover, the deal would eliminate the need for the two holding companies to compete for employees, the FTC alleges, adding that if the deal were to take place, the two companies would employ about 33,000 employees globally.
Should Tapestry acquire Capri, the FTC alleges the deal would not be Tapestry’s last, as it would give “Tapestry additional leverage to make even more acquisitions,” it said.
In a separate statement, Tapestry said that the FTC “fundamentally misunderstands both the marketplace and the way in which consumers shop.”
The two holding companies already “operate in an intensely competitive and highly fragmented industry alongside hundreds of rival brands, including both established players and new entrants,” Tapestry added.
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