US FTC Sues to Halt Tapestry’s Capri Acquisition, Citing Concerns Over Handbag Market Dominance
The US Federal Trade Commission (FTC) announced its legal action to block Tapestry’s proposed $8.5 billion acquisition of Capri Holdings, the parent company of Michael Kors, citing potential harm to competition in the handbag market.
This move by the FTC reflects a broader trend of increased scrutiny by US lawmakers over multi-billion dollar deals that could impact consumer prices and market competition. In December, US antitrust enforcers introduced new merger guidelines aimed at promoting fair and competitive markets.
In a statement, the FTC expressed concerns that the merger would eliminate competition between Tapestry and Capri, particularly in areas such as pricing, discounts, innovation, and marketing strategies. The commission argued that such competition benefits consumers by offering a variety of choices and competitive pricing.
Tapestry had announced its intention to acquire Capri in August, aiming to create a formidable US fashion conglomerate capable of competing with major European luxury brands like LVMH. However, the FTC’s request for additional information in November signalled potential antitrust concerns.
Capri Holdings responded to the FTC’s decision, expressing strong disagreement and asserting that the merger would not diminish competition in the market. Tapestry echoed similar sentiments, emphasizing the pro-competitive nature of the deal and asserting that the FTC misunderstood the marketplace and consumer behaviour.
Despite regulatory clearance from the European Union and Japan earlier in April, the FTC’s legal challenge adds uncertainty to the proposed acquisition, which would bring together renowned luxury labels such as Kate Spade and Jimmy Choo under one umbrella.
