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, Judge Jennifer Rochon ruled that the merger would harm competition in the accessible luxury market, stating, "the merging parties are close competitors, such that the merger would result in the loss of head-to-head competition." This sentiment was echoed by Axios, which noted that the ruling deprives Capri of a significant growth opportunity. Meanwhile, the New York Times highlighted the FTC's broader strategy under Lina Khan, emphasizing that the agency's focus on consumer welfare is reshaping antitrust enforcement. Critics, however, argue that the FTC's focus on handbags may be misplaced, as noted by former FTC chair William Kovacic, who stated, "There's a narrative that these guys can't win."
How we got here
The FTC filed a lawsuit to block the merger in April 2024, arguing it would harm competition in the accessible luxury handbag market. A judge ruled in favor of the FTC, leading to a preliminary injunction against the merger.
Common question
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What are the implications of the FTC blocking the Tapestry-Capri merger?
The recent decision by the Federal Trade Commission (FTC) to block Tapestry's $8.5 billion acquisition of Capri Holdings has sent shockwaves through the luxury handbag market. This ruling raises several questions about competition, stock performance, and future strategies for both companies. Below, we explore the key implications of this significant antitrust decision.
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.