Federal Judge Halts Tapestry’s Acquisition of Capri Holdings Over Antitrust Concerns

Federal Judge Blocks Tapestry’s Acquisition of Capri Holdings

A federal judge issued a ruling on Thursday that effectively halts the merger between two prominent fashion conglomerates, Tapestry and Capri Holdings. The companies own well-known brands such as Coach, Kate Spade, Michael Kors, and Versace. The judge determined that this merger would likely “substantially lessen competition” in the market for accessible luxury handbags, a decision that could have wide-ranging implications for consumers.

This legal action stems from a lawsuit filed by the Federal Trade Commission (F.T.C.) last spring, challenging the $8.5 billion deal, which was perceived as a significant move in the already competitive fashion industry. The case is notable, given the industry’s high competitiveness and relatively low barriers to entry for new players.

Judge Jennifer L. Rochon, presiding in the Southern District of New York, appeared to support the F.T.C.’s argument that the merger could lead to higher prices for handbags and other fashion items for tens of millions of American consumers. She stated, “Antitrust has come into fashion,” emphasizing the importance of maintaining competitive practices in the retail sector.

The proposed acquisition, announced by Tapestry in August 2023, was seen as a signal of ongoing consolidation within the luxury fashion market. Tapestry argued that the retail landscape is characterized by fierce competition, dynamism, and constant expansion, asserting that the merger would not hinder market competition.

In response to the ruling, Tapestry expressed disappointment and maintained its stance that the decision was “incorrect on the law and the facts.” The company indicated plans to appeal the ruling, emphasizing its belief in the competitive nature of the retail industry.

As part of the ruling, Judge Rochon issued a preliminary injunction that prevents the acquisition from proceeding while the F.T.C. conducts further investigations into the merger in its administrative court.

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