Merger Under Scrutiny by Federal Trade Commission
Tapestry Inc. and Capri Holdings Ltd. announced on Monday that they have filed a notice to jointly appeal a U.S. District Court ruling that temporarily blocks their proposed $8.5 billion merger. The appeal follows a decision by U.S. District Judge Jennifer Rochon, who expressed concerns about the implications of the merger on competition in the affordable luxury handbag market.
Judge’s Ruling Highlights Competitive Concerns
In her ruling on Thursday, Judge Rochon noted that Tapestry and Capri are “close competitors,” asserting that their merger could lead to a significant reduction in head-to-head competition. The judge stated that such a merger could potentially raise prices for consumers and diminish choices within the marketplace.
FTC’s Legal Challenge
The ruling comes in the wake of a lawsuit filed by the Federal Trade Commission (FTC) six months ago, seeking to block the acquisition. The FTC argued that the merger would eliminate direct competition between the brands owned by Tapestry and Capri, which include notable names like Coach, Michael Kors, and Versace.
The FTC further raised concerns that the merger could undermine competition for talent, potentially leading to lower wages and reduced workplace benefits for employees. The combined entity would employ approximately 33,000 people globally, amplifying the stakes involved in this merger.
Tapestry’s Response to the Ruling
In an email statement to The Associated Press, Tapestry expressed disappointment over the court’s decision, labeling it “incorrect on the law and the facts.” The company, which has been actively acquiring brands over the past few years, aims to enhance its market position by integrating Capri’s portfolio alongside its existing brands like Kate Spade New York and Stuart Weitzman.
