The trade authorities in the US have blocked Tapestry’s proposed takeover of Capri Holdings. By Leatherbiz.

Tapestry, whose brands are Coach, Stuart Weitzman and Kate Spade, announced in August 2023 that it wanted to acquire Capri Holdings, whose brands are Versace, Michael Kors and Jimmy Choo. The groups agreed a price of $8.5 billion for the deal and said they expected it to close in 2024.

However, in April, the US Federal Trade Commission (FTC) moved to block the deal. It said: “If allowed, the deal would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands. It would also give Tapestry a dominant share of the ‘accessible luxury’ handbag market, a term coined by Tapestry to describe quality leather and craftsmanship handbags at an affordable price.”

It said the proposed merger could have an effect on consumers because of a lack of competition on price, discounts and promotions, innovation, design, marketing, and advertising.

According to the FTC, the deal could also be bad news for workers. It said: “It also threatens to eliminate the incentive for the two companies to compete for employees and could negatively affect employees’ wages and workplace benefits.”

Tapestry responded by saying it had strong legal arguments to support its bid for Capri and would present these to the courts in an attempt to overcome the FTC’s objections. The group said the FTC “fundamentally misunderstands the marketplace and the way in which consumers shop”.

It said: “Tapestry and Capri operate in an intensely competitive and highly fragmented industry alongside hundreds of rival brands, including established players and new entrants. We also compete for consumers who are cross-shopping a wide range of channels and brands along a vast pricing spectrum when considering what to purchase. The reality is that consumers have a host of choices when shopping for luxury handbags and accessories, footwear, and apparel, and they are exercising them.”