• by Tanya Gazdik , April 23, 2024

The Federal Trade Commission is suing to block the $8.5 billion fashion merger between Tapestry and Capri Holdings. 

Tapestry is the owner of Coach, Kate Spade and Stuart Weitzman while Capri Holdings is the parent company of Versace, Jimmy Choo and Michael Kors. The deal was expected to close this year.

“At the center of the FTC’s concerns are ‘accessible luxury’ accessories — an industry term for the less expensive wares sold by Coach, Kate Spade and Michael Kors,” according toThe New York Times. “The agency said tens of millions of Americans could end up paying more for these items because the combined company would no longer have the incentive to compete on price.”

Within the mid-priced part of the market there are literally hundreds of other brands to choose from including Radley, Calvin Klein, American Leather Co, Chloe, DKNY and Ralph Lauren, notes Neil Saunders, managing director of GlobalData.

“Consumers do not just go out to buy ‘accessible luxury’ handbags, they generally start with a need for a product and then explore a variety of brands before buying something within their budget, Saunders explained,” according to Inside Retail. “Regarding the competition between Coach and Michael Kors, both labels offer ‘fish from different pools’ and have different brand positionings. A Michael Kors bag is not, for many, a direct substitute for a Coach one, Saunders said.”

The merger could position the luxury brands to better compete with European luxury names, such as Burberry and LVMH's Louis Vuitton, according to CNBC.

In an interview with Reuters, Tapestry CEO Joanne Crevoiserat said the company was "proud of the wages and benefits" it offers to employees and that the competition for talent goes beyond just the fashion industry.

"Lina Khan, the Federal Trade Commission chair, has made taking on the power of big business a priority since taking over the agency," according to The New York TImes.