To stop the $8.5 billion (£6.9 billion) takeover of rival Capri by fashion accessory giant Tapestry, the US Competition Commission has filed a lawsuit.
The FTC filed a federal court lawsuit on Monday against the proposed acquisition, which would give one corporation ownership over six fashion brands: Michael Kors, Versace, Jimmy Choo, Tapestry’s Coach, Kate Spade, and Stuart Weitzman.
The transaction is anticipated to unite Versace, Jimmy Choo, and Michael Kors from Capri with Coach, Kate Spade, and Stuart Weitzman from Tapestry. In all, the two businesses brought in over US$12 billion in revenue annually, as stated in a statement released by Capri Holdings.
The US Federal Trade Commission (FTC) said if allowed, “the deal would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands”.
“With the goal to become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry,” Henry Liu, director of the FTC’s Bureau of Competition, stated. “This deal threatens to deprive consumers of the competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions.”
Tapestry rejected the FTC’s stance, saying the agency understands neither the marketplace nor how people shop.
Versace and Jimmy Choo are both owned by Capri, which stated that “this transaction will not limit, reduce, or constrain competition” because the two companies “operate in the fiercely competitive and highly fragmented global luxury industry”.
The US regulator’s attempt to obstruct a merger in the upscale apparel industry is unique.
According to Tapestry, it plans to purchase Capri in August 2023. In 2022, the combined sales of the enterprises exceeded $12 billion.