FTC Challenges Tapestry’s $8.5 Billion Merger with Capri, Citing Threat to Handbag Market Competition

The U.S. Federal Trade Commission (FTC) is set to urge a federal judge in New York to block Tapestry Inc.’s $8.5 billion merger with Capri Holdings, arguing that it would stifle competition in the “accessible luxury” handbag market. The FTC contends that the merger, announced in August 2023, would reduce competition between Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand, which currently benefits consumers through better prices, promotions, and improved employee wages and benefits.

Tapestry counters the FTC’s assertions, contending that the agency has mischaracterized the competitive dynamics of the handbag market and consumer purchasing behaviour. They argued that “accessible luxury” is merely a conceptual term and that the U.S. handbag market remains highly fragmented with significant competition, low entry barriers, and fluctuating consumer preferences. Tapestry maintains that the FTC’s analysis is flawed, failing to recognize the broader competitive landscape in which numerous other players operate, thus undermining the agency’s claim of reduced competition post-merger.

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