The prestigious agency has voiced its opposition to the proposed luxury merger between the parent company of Coach, Tapestry, and the owner of Michael Kors, Capri, in a staggering $8.5 billion deal.
Embarking on a legal battle, the U.S. Federal Trade Commission will implore a federal judge in New York to obstruct Tapestry’s acquisition of Capri Holdings, asserting that the merger would obliterate intense competition in the realm of “accessible luxury.”
The FTC contends that the merger, unveiled in August 2023, would eradicate direct competition between Tapestry’s renowned Coach and Kate Spade brands and Capri’s iconic Michael Kors labels, ultimately depriving consumers of favorable prices, discounts, and promotional offerings, as well as endangering the wages and workplace provisions for employees.
Moreover, this consolidation would grant Tapestry a predominant share of the “accessible luxury” handbag sector, a concept coined by Tapestry to characterize exquisite leather and artistry in handbags at an affordable price point, as outlined in the FTC’s lawsuit filed in April.
In response, Tapestry challenges the FTC’s evaluation, asserting that their perception of the handbag market and consumer behavior is flawed, and arguing that the term “accessible luxury” is merely hypothetical. They maintain that the U.S. handbag market is fiercely competitive, characterized by a myriad of choices, modest competitive barriers, and fluctuating consumer preferences.
The FTC has been engaged in a flurry of legal actions to thwart various mergers over the past year, including their vigorous opposition to Kroger’s acquisition of Albertsons and the attempted $4 billion acquisition of Mattress Firm by Tempur Sealy International.
The upcoming trial, presided over by District Court Judge Jennifer Rochon in the Southern District of New York, is anticipated to stretch over a week and a half. Noteworthy testimonies from industry experts, such as Jeff Gennette, former CEO of Macy’s, are expected to shed light on consumer choices and handbag market dynamics.
This legal battle unfolds subsequent to the approval of the merger by antitrust authorities in Japan and the European Union earlier this year.
Attribution: Written by Siddharth Cavale in New York; edited by Diane Craft.
Vocabulary List:
- Opposition /ˌɒp.əˈzɪʃ.ən/ (noun): A resistance or dissent expressed in action or argument.
- Obstruct /əbˈstrʌkt/ (verb): To block or impede progress or movement.
- Eradicate /ɪˈræd.ɪ.keɪt/ (verb): To remove or destroy completely.
- Predominant /prɪˈdɒmɪnənt/ (adjective): Having greater importance or influence than others.
- Consolidation /kənˌsɒl.ɪˈdeɪ.ʃən/ (noun): The act of combining or uniting into one.
- Vigorous /ˈvɪɡ.ər.əs/ (adjective): Characterized by strength energy or vigorous action.
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