US sues to block Tapestry’s Capri deal citing handbag market domination

By Thomson Reuters Apr 22, 2024 | 3:56 PM

(Reuters) -The U.S. Federal Trade Commission (FTC) said on Monday it was suing to block Coach parent Tapestry’s $8.5 billion deal to buy Michael Kors owner Capri, saying it would eliminate competition.

This comes at a time when several U.S. lawmakers have sought increased scrutiny from the FTC of several multi-billion dollar deals that might risk higher prices and affect consumers.

U.S. antitrust enforcers had also come out with new merger guidelines in December, in a bid to encourage fair, open and competitive markets.

“The proposed merger threatens to deprive millions of American consumers of the benefits of Tapestry and Capri’s head-to-head competition, which includes competition on price, discounts and promotions, innovation, design, marketing and advertising,” FTC said in a statement.

Tapestry had offered to buy Capri in August, hoping to create a U.S. fashion behemoth that could effectively battle bigger European rivals such as Louis Vuitton parent LVMH and potentially get more share in the global luxury market.

But the FTC requested for more information from the firms on their deal in November.

“Capri Holdings strongly disagrees with the FTC’s decision,” the company said in a statement. “The market realities, which the government’s challenge ignores, overwhelmingly demonstrate that this transaction will not limit, reduce, or constrain competition.”

Tapestry, in a statement, also said “there is no question that this is a pro-competitive, pro-consumer deal and that the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop.”

Earlier in April, the companies had received regulatory clearance from the European Union and Japan for their deal, that would bring top luxury labels such as Kate Spade and Jimmy Choo under one roof.

(Reporting by Jasper Ward in Washington and Granth Vanaik in Bengaluru; Editing by David Ljunggren and Shilpi Majumdar)