OMG! US SUES to BLOCK Coach & Michael Kors MERGER! Will this fashion battle END their 1 dominance?

OMG! 🤯 US SUES to BLOCK Coach & Michael Kors MERGER! 😱 Will this fashion battle END their dominance?

The US competition watchdog has sued to block fashion accessory giant Tapestry’s $8.5bn (£6.9bn) takeover of rival Capri. The US Federal Trade Commission (FTC) said that if approved, “the deal would eliminate direct competition between the Tapestry and Capri brands”. Tapestry owns handbag makers including Coach and Kate Spade, while Capri’s brands include Michael Kors.

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In response, Tapestry said that “the FTC fundamentally misunderstands both the market and the way consumers shop.”The companies together employ about 33,000 workers worldwide, but the FTC argued that the deal could reduce wages and benefits.

Coach and Kate Spade are known for what their parent company calls “affordable luxury” handbags—quality leather and craftsmanship at affordable prices. Tapestry offered to buy Capri in August, hoping to create an American fashion giant that could compete with bigger European rivals such as Chanel, Hermes, and Louis Vuitton’s parent company LVMH.

The FTC requested more information about the deal in November. The FTC announced its decision to take legal action, saying the deal would give Tapestry a dominant market share. Tapestry said in a statement that “in bringing this case, the FTC chose to ignore the reality of today’s dynamic and expanding $200 billion global luxury industry.”

Capri, which also owns Versace and Jimmy Choo, said “This transaction will not restrict, reduce or restrict competition” as the two firms “operate in a highly competitive and highly fragmented global luxury industry”.It is unusual for a US regulator to seek to block a high-end fashion merger.

But in December, authorities issued new merger guidelines to promote fair, open, and competitive markets. Using a new tactic under the FTC’s guidelines, it argued that a merger between Tapestry and Capri would directly affect hourly workers, who may lose out on higher wages due to reduced competition for employees.

Earlier this month, the companies received regulatory approval for the transaction from the European Union and Japan. The two companies have until August 10 to complete the deal.

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