The handbag wars have begun after the US sued to block the merger of Coach and Michael Kors
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- The FTC announced a lawsuit that blocks a merger between luxury brands Tapestry and Capri.
- The FTC claims Tapestry's acquisition of Capri could make more affordable luxury bag options expensive.
- Tapestry and Capri argue the luxury handbag market is too saturated for that to happen.
The FTC is trying to stop a merger between brands Tapestry and Capri that would put labels Coach, Kate Spade, Michael Kors, Jimmy Choo, and Versace under one luxury house.
Tapestry, Inc., which owns Kate Spade and Coach, announced in August its intent to acquire Capri Holdings, which owns Michael Kors, for $8.5 billion. Regulators in the European Union and Japan are on board with the acquisition — but US regulators are taking a different approach.
The FTC announced that it filed a lawsuit Monday to block the merger. The commission said in a press release it believes the action would give Tapestry "a dominant share of the 'accessible luxury' handbag market."
If Tapestry took over Michael Kors, the FTC claims, it would make the brand's luxury options more expensive.
"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, said in the press release. "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."
Both Tapestry and Capri Holdings released statements opposing the FTC's accusations and vowed to fight the lawsuit in court. The companies disagreed with the FTC, saying that they operate "intensely competitive and highly fragmented industry."
"The bottom line is that Tapestry and Capri face competitive pressures from both lower- and higher-priced products," Tapestry said in its statement. "In bringing this case, the FTC has chosen to ignore the reality of today's dynamic and expanding $200 billion global luxury industry."
Tapestry did not immediately respond to a request for comment. Capri Holdings directed BI to its public statement, and the FTC declined to comment further.
The FTC, under the guidance of chair Lina Khan, has gone after a series of mergers and acquisitions over the past few years, including Microsoft's purchase of Activision Blizzard and Meta's purchase of VR company Within. Both of these lawsuits failed to block these purchases.
This is the FTC's first lawsuit in the fashion accessories sector, according to Bloomberg.
More recently, the agency filed a lawsuit to block the $24.6 billion merger of grocery chains Albertsons and Kroger, which it said was the "largest proposed supermarket merger in US history." The companies responded by pledging to sell hundreds of stores to competing grocery chain C&S Wholesale Grocers.