NEW YORK – A US judge on Oct 24 blocked fashion group Tapestry’s US$8.5 billion (S$11.2 billion) deal to buy Capri, which owns luxury brands including Michael Kors and Versace, citing a potential loss of competition.
The deal, seen as an attempt to create a new global fashion giant to compete with European powerhouses, was halted by a federal court in New York after the US Federal Trade Commission (FTC) sued to prevent it earlier in 2024.
“The court finds that the merging parties are close competitors, such that the merger would result in the loss of head-to-head competition,” court documents read, after seven days of testimony.
Tapestry, which owns brands including Coach and Kate Spade, said in a statement to AFP that it planned to appeal.
Calling the ruling “disappointing”, Tapestry said the fashion industry at large was “constantly expanding” and “intensely competitive and dynamic”, and the merger would have been “pro-competitive and pro-consumer”.
The ruling is seen as a victory for the FTC, an independent agency whose current chair was appointed by US President Joe Biden.
Both the FTC and the Department of Justice’s antitrust division have ramped up action against corporate mergers in recent years. Earlier in 2024, JetBlue and Spirit Airlines pulled the plug on a merger weeks after a federal judge ruled that it violated US antitrust law.
President Biden lauded the decision, saying the merger would have forced higher fares and fewer choices on US consumers.
Still, the FTC’s move to block the Capri deal came as a surprise, with such actions rare in the fashion industry, a sector generally considered fragmented and with no risk of a dominant player.
But the agency argued that the proposed merger threatened to “deprive millions of American consumers of the benefits of Tapestry and Capri’s head-to-head competition”.
