FTC Moves to Block Tapestry's $8.5 Billion Acquisition of Capri Over Competition Concerns

The Federal Trade Commission (FTC) has initiated legal action to prevent Tapestry, Inc.'s proposed $8.5 billion takeover of Capri Holdings Limited, citing severe competition concerns in the accessible luxury market. This market, which includes popular brands such as Tapestry’s Coach and Kate Spade, and Capri’s Michael Kors, is known for high-quality, affordably priced luxury handbags.

The FTC's complaint, announced today, outlines that the merger would not only curb direct competition between these major brands but could also lead to a dominant market position for Tapestry in the accessible luxury segment. Such dominance, the FTC argues, could result in higher prices for consumers and stifle innovation and choice in the industry.

Henry Liu, Director of the FTC’s Bureau of Competition, emphasized that the merger could "deprive consumers of the competition for affordable handbags," affecting everything from pricing strategies to marketing approaches. Additionally, the merger could potentially harm employees, reducing the incentive for the two companies to compete for talent, possibly impacting wages and workplace benefits.

Tapestry's aggressive acquisition strategy over the past decade has positioned it as a significant player in the fashion industry, with the FTC pointing out that this move to acquire Capri represents a continuation of Tapestry’s ambitions to consolidate its power in the market. The FTC's intervention reflects its mandate to maintain competition and prevent market monopolization.

The unanimous FTC vote to pursue a temporary restraining order and preliminary injunction highlights the seriousness of the competitive threats posed by the merger. The Commission’s proactive stance serves as a reminder of the regulatory hurdles that large corporate acquisitions can face, especially those with the potential to reshape significant market landscapes. The public version of the complaint will be made available shortly, providing further details on the FTC's allegations and the legal arguments against the merger.