The U.S. Federal Trade Commission took action on Monday to stop the $8.5 billion purchase of Capri Holdings by Tapestry, the parent company of Coach and Kate Spade.
This move pauses the deal for now. If it went through, it would bring together two big players in American luxury fashion.
It would also mean that six famous fashion brands—Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors—would be under one roof. This could help them compete better against top European luxury brands like Burberry and Louis Vuitton.
The FTC, in a statement, explained that if the companies merged, it could harm both shoppers and employees. It pointed out that Tapestry and Capri currently compete in various areas like clothing, eyewear, and shoes.
Henry Liu, from the FTC, expressed concerns that Tapestry’s desire to buy Capri could lead to less competition in the fashion world. He mentioned that consumers might end up with fewer choices for affordable handbags, and workers might lose out on better pay and working conditions.
However, Tapestry disagreed with the FTC’s stance. The company argued that the agency didn’t fully understand how consumers shop nowadays. They emphasized that they need to win over customers who shop across different brands, stores, and price ranges.
