What's happened
The Federal Trade Commission has successfully blocked Tapestry's $8.5 billion acquisition of Capri Holdings, citing concerns over reduced competition in the accessible luxury handbag market. The ruling has led to a significant drop in Capri's stock, while Tapestry plans to appeal the decision.
Why it matters
What the papers say
According to Bloomberg, the judge's ruling was based on the FTC's argument that the merger would harm competition in the accessible luxury market, which Tapestry described as 'incorrect on the law and the facts.' The New York Times noted that Judge Rochon acknowledged the potential for higher prices for consumers if the merger proceeded, stating, 'Antitrust has come into fashion.' Meanwhile, Axios highlighted the FTC's broader view of antitrust regulation, suggesting that this case could influence future actions against other sectors. Critics, including former FTC chair William Kovacic, argue that the agency's focus on handbags may be misplaced, indicating a need for a more strategic approach to antitrust enforcement.
How we got here
The FTC filed a lawsuit in April 2024 to block Tapestry's acquisition of Capri, arguing it would harm competition in the handbag market. A judge's ruling on October 24, 2024, confirmed the FTC's concerns, leading to the merger's halt.
More on these topics
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Capri Holdings Limited is a multinational fashion holding company, incorporated in the British Virgin Islands, with executive offices in London and operational offices in New York. It was founded in 1981 by American designer Michael Kors.
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The Federal Trade Commission is an independent agency of the United States government whose principal mission is the enforcement of civil U.S. antitrust law and the promotion of consumer protection.
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Tapestry, Inc. is an American multinational luxury fashion holding company. It is based in New York City and is the parent company of three major brands: Coach New York, Kate Spade New York and Stuart Weitzman.
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Lina M. Khan is an American legal scholar specializing in antitrust and competition law in the United States. She is an associate professor of law at Columbia Law School.