US FTC moves to block Tapestry's acquisition of Capri

FTC feels, the deal, if allowed, would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands. It would also give Tapestry a dominant share of the ‘accessible luxury’ handbag market.

FTC issued an administrative complaint and authorised a lawsuit in federal court to block the proposed acquisition, alleging that Tapestry’s acquisition of Capri will eliminate fierce competition between the two companies.

The proposed merger threatens to deprive millions of American consumers of the benefits of Tapestry and Capri’s head-to-head competition, which includes competition on price, discounts and promotions, innovation, design, marketing and advertising, an FTC release said.

The deal also threatens to eliminate the incentive for the two companies to compete for employees and could negatively affect employees’ wages and workplace benefits, it said.

Tapestry and Capri currently compete on everything from clothing to eyewear to shoes.

Given Tapestry’s pattern of serial acquisitions, the acquisition of Capri will further entrench Tapestry’s stronghold, making it harder for new brands to both enter the market and have a meaningful presence, FTC alleges.

Documents produced by Tapestry indicate that it has no plans to stop acquisitions even after this proposed merger, the FTC’s complaint states. 

“There is no question that this is a pro-competitive, pro-consumer deal and that the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop. Tapestry and Capri operate in an intensely competitive and highly fragmented industry alongside hundreds of rival brands, including both established players and new entrants,” Tapestry said responding to the development.

“….Tapestry and Capri face competitive pressures from both lower- and higher-priced products. In bringing this case, the FTC has chosen to ignore the reality of today’s dynamic and expanding $200 billion global luxury industry,” it noted.

“We have full confidence in the merits and pro-competitive nature of this transaction. It will bring significant benefits to the combined company’s customers, employees, partners, and shareholders in the US and around the world. We....look forward to....working expeditiously to close the transaction in calendar year 2024,” it added.

Fibre2Fashion News Desk (DS)