A New York judge has blocked fashion houses Tapestry and Capri’s plan to merge, saying it would reduce competition in the “affordable luxury” segment. The proposed merger has been described as creating an “American LVMH.”

Tapestry, which owns the Coach, Kate Spade, and Stuart Weitzman brands, agreed in August 2023 to pay $8.5 billion to buy rival conglomerate Capri Holdings, owner of Versace, Jimmy Choo, and Michael Kors.

But the Federal Trade Commission (FTC) sued to block the merger, arguing it would give Tapestry a dominant position in the accessible luxury realm, particularly in handbags.

“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,” said an FTC statement. “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.”

In a 169-page decision temporarily enjoining the merger, U.S. District Judge Jennifer L. Rochon noted that “antitrust has come into fashion.” She concluded that since the “merging parties are close competitors,” the proposed deal “would result in the loss of head-to-head competition” and possibly harm consumers.

In a statement, Tapestry called the decision “disappointing” and said it plans to appeal.

“Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants,” it said. “We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer. “

Capri also said it planned to appeal.

(Photo: Getty Images)

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