The US Federal Trade Commission (FTC) is taking legal action to prevent Coach parent company Tapestry from acquiring Michael Kors owner Capri in an $8.5 billion deal. The FTC is concerned that the merger could stifle competition in the fashion industry and ultimately harm consumers.
This move comes as US lawmakers are calling for stricter oversight of major mergers and acquisitions that could impact market prices. In December, antitrust enforcers in the US released new merger guidelines aimed at promoting fair and competitive markets.
The FTC argues that the proposed deal between Tapestry and Capri could eliminate competition in several key areas, including pricing, discounts, innovation, design, marketing, and advertising. Tapestry had initially sought to purchase Capri with the intention of creating a powerful US fashion conglomerate that could rival European brands.
Capri Holdings, however, disputes the FTC’s claims and asserts that the merger will not harm competition. Tapestry maintains that the deal is actually beneficial for consumers and promotes healthy market competition. The company argues that the FTC’s concerns are based on a misunderstanding of the fashion marketplace.
Despite facing opposition from the FTC, Tapestry and Capri had previously received clearance from regulatory bodies in the EU and Japan for the acquisition. The merger would bring together well-known luxury brands such as Kate Spade and Jimmy Choo under one corporate umbrella.
As the legal battle between Tapestry and the FTC unfolds, the fate of this major acquisition in the fashion industry remains uncertain. Stay tuned for updates on this developing story.
