A US judge put a stay on the case pending $8.5 billion merger The sale Thursday of handbag and accessories makers Tapestry and Capri is a victory for the Federal Trade Commission in an industry where merger challenges are rare.
The FTC argued in an eight-day trial in New York that the merger would eliminate fierce competition between the two Top two American handbag manufacturers And create a giant company with the power to unfairly raise prices for consumers.
Coach parent Tapestry countered those claims, saying the deal was driven by the highly competitive US handbag industry and the need to fight against European players like Gucci, which are rapidly gaining market share.
Tapestry’s lawyers said in court documents that the ruling effectively permanently blocks the proposed deal. There is little precedent for merger challenges in the fashion industry, which is too fragmented and competitive to foster traditional monopolies.
The decision is a victory for the Biden administration ahead of the November 5 presidential election, in which rising consumer prices have emerged as a major issue.
If the deal had gone ahead, six brands would have come under one roof. Those brands are: Tapestry Coach, Kate Spade and Stuart Weitzman; and Capri’s Versace, Jimmy Choo and Michael Kors.
Tapestry and Capri also argued before U.S. District Judge Jennifer Rochon that reviving the Michael Kors brand, using more of Tapestry’s resources to invest in all the Capri brands, and selling more handbags would actually result in less competition in the industry. Instead it will increase.
The decision comes after Japan and EU regulators approved the merger earlier this year.
