US Federal Trade Commission Sues to Block Tapestry’s Acquisition of Capri
The US Federal Trade Commission (FTC) has taken legal action to prevent fashion group Tapestry’s $8.5 billion acquisition of Capri, the parent company of luxury brands like Michael Kors and Versace.
Reasons for Lawsuit
- The deal would eliminate direct competition between Tapestry and Capri brands.
- Tapestry would gain a dominant share of the ‘accessible luxury’ handbag market.
Planned Benefits of the Acquisition
The acquisition aims to:
- Combine customer data streams.
- Broaden geographic reach.
- Achieve $200 million in annual cost savings within three years.
The new company resulting from the merger would also include Tapestry’s Stuart Weitzman and Capri’s Jimmy Choo shoe brands.
Impact on Consumers
The FTC warns that the merger could harm American consumers by:
- Reducing competition on price, discounts, and promotions.
- Limiting innovation, design, marketing, and advertising.
The acquisition would give Tapestry a strong portfolio of upscale brands, expanding its offerings in shoes, handbags, and apparel with Versace and Kors.
Recent Actions by the FTC and Department of Justice:
- The FTC has been actively opposing corporate mergers.
- In February, the FTC blocked a major supermarket merger.
- JetBlue and Spirit Airlines canceled their merger following a court ruling in January.