Washington, DC – Federal antitrust regulators are gearing up to potentially file a lawsuit to block the $8.5 billion bid by Coach parent Tapestry to acquire the owner of Michael Kors, Capri Holdings. The move comes as the proposed merger has raised concerns about potential competition issues in the luxury fashion market.
According to reports, the Federal Trade Commission (FTC) is scheduled to convene next week to deliberate on the case, possibly leading to a vote on whether to proceed with legal action. The merger would bring together top luxury brands, such as Tapestry’s Kate Spade and Stuart Weitzman, with Capri’s Jimmy Choo and Versace, creating a formidable U.S. fashion powerhouse in an industry facing challenges due to reduced spending on luxury goods.
Despite receiving clearance from regulators in the European Union and Japan, the proposed merger is under scrutiny by U.S. authorities. The FTC’s interest was piqued following a request for more information on the deal made to the companies last November, raising concerns about potential repercussions on competition and consumer pricing in the market.
Tapestry CEO Joanne Crevoiserat remains optimistic about the deal’s prospects, expecting it to finalize in 2024. She emphasized that navigating regulatory challenges is part of the process and believes that divesting brands to secure approval is unnecessary. However, Capri Holdings stock experienced a 2.72% decline while Tapestry’s fell by 0.91% in Wednesday’s trading.
If the FTC moves forward with blocking the merger, it would align with the Biden administration’s approach to impeding mergers deemed detrimental to competition. Similar efforts have been seen in recent legal challenges against proposed mergers in various industries, reflecting a broader regulatory stance on antitrust issues in the current climate.
The FTC’s intervention in high-profile mergers, such as Microsoft’s acquisition of Activision Blizzard, underscores the importance of regulatory oversight in maintaining market competition. President Biden’s stance on foreign acquisitions, like Nippon Steel’s bid for U.S. Steel, signals a commitment to protecting domestic industries from potential threats to fair competition.