US judge blocks Tapestry's $8.5 billion merger with Capri
- A US judge permanently blocked the merger of Tapestry and Capri, which would have created a market leader in the handbag industry.
- The US Federal Trade Commission argued the merger would harm competition and allow the new entity to raise prices.
- This decision is a significant step in increasing regulatory oversight on mergers within the fashion industry, a rare occurrence.
In October 2024, a US judge blocked the proposed $8.5 billion merger between Tapestry, a US handbag maker, and Capri, marking a significant decision against a backdrop of increasing scrutiny on corporate consolidations. The US Federal Trade Commission (FTC) challenged the merger, arguing it would reduce competition and allow the merged entity to raise prices unfairly for consumers. Legal proceedings held in New York highlighted the FTC's position that the merger would eliminate aggressive competition between the two leading players in the US handbag market. Tapestry contended the deal was necessary to compete better against European luxury brands, claiming it would promote competition instead of hindering it. The ruling, which permanently prevents the merger, is noteworthy in an industry where such challenges are uncommon. Typically seen as too fragmented to support traditional monopolies, the fashion sector has seen little precedent for similar merger interventions. This outcome is perceived as a political win for the Biden administration, especially as consumer prices rise ahead of the November 5 presidential election. The blocked deal would have combined major brands, including Tapestry’s Coach and Kate Spade with Capri’s Versace and Michael Kors, ultimately reshaping the competitive landscape of the US handbag market. As the industry grapples with these developments, Tapestry's attempt to leverage Capri’s resources for brand revitalization and increased handbag sales raises questions about the future dynamics of competition in this sector. The case reflects broader regulatory trends focused on maintaining market competition in various industries throughout the country.