Report: FTC Considering Blocking Tapestry-Capri Holdings Merger

The Federal Trade Commission (FTC) is preparing to sue to block a luxury fashion mega merger, Tapestry’s $8.5 billion takeover of Capri Holdings, two people with knowledge of the matter said. The FTC’s five commissioners are expected to meet next week to discuss the case, a move that could precede a formal vote on whether to file a lawsuit, the people said. The people, who were not authorized to discuss the deliberations, said it was still possible that the agency could opt not to sue. The deal, intended to bring together labels such as Tapestry’s Coach and Kate Spade with Capri’s Versace and Michael Kors, would create an American luxury conglomerate to compete with European powerhouses like Louis Vuitton’s parent, LVMH, and Kering, the owner of Gucci.

Total Retail's Take: The deal, which was announced last August, would typically not be one to raise a lot of scrutiny from regulators. With so much competition in the fashion sector, with new brands being launched seemingly daily online, a merger of two fashion brands wouldn't be expected to raise monopoly concerns. And in fact the deal has already been approved by regulators in the European Union and Japan. Yet it has not received an easy pass from U.S. regulators, who may believe that merging Michael Kors and Coach under the same parent company may limit the need for those brands to compete on price, which could, in turn, make their products more expensive for consumers. Consolidation in the fashion industry was a headline in 2023; that trend might be slowing in 2024 — aided by the influence of regulators.