| AP Yonhap News |
Tapestry, the parent company of American fashion brand Coach, faced a roadblock from U.S. regulators in its bid to acquire Capri Holdings, which owns brands such as Michael Kors, for $8.5 billion (approximately 11.7 trillion KRW).
According to the Financial Times (FT) and the Wall Street Journal (WSJ), on the 22nd (local time), the Federal Trade Commission (FTC) filed a lawsuit to prevent Tapestry’s acquisition of Capri.
The FTC predicted that Tapestry’s acquisition would eliminate competition in the mass prestige market, depriving consumers of opportunities. The FTC argued that Tapestry would “secure a dominant position in the accessible luxury handbag market” with this acquisition and that “this transaction will rob consumers of the opportunity to buy affordable handbags and deprive workers of the chance to earn higher wages and secure better working conditions.”
In particular, FT pointed out that this lawsuit is in line with one of the top priorities of Lina Khan, Chairwoman of the FTC under the Biden administration, which is to maintain competition in the labor market. If the two companies merge, the global workforce will reach 33,000, potentially hindering competition for talent and threatening workers’ wages and benefits.
In response to the FTC’s lawsuit, Tapestry refuted it by stating that “this acquisition is pro-competition and pro-consumer.” They explained that they operate in a highly competitive and fragmented sector and that the FTC fundamentally misunderstands the market and how consumers shop. Capri also released a statement claiming that the FTC is “the only regulatory body that has put a brake on this transaction, which has been approved in all other jurisdictions.” The deal has received approval from regulators in Japan and Europe.
FT pointed out that this action could derail American companies’ efforts to narrow the gap with ‘luxury empires’ like LVMH and Kering, which have acquired multiple luxury brands.
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