What: The U.S. Federal Trade Commission (FTC) has filed a lawsuit to block the proposed USD 8.5 billion acquisition of Capri Holdings by Tapestry Inc., citing antitrust concerns and potential harm to consumers in the affordable luxury sector.

Why it is important: This legal action marks a significant move by the Biden administration's aggressive antitrust enforcement in the fashion industry, specifically targeting a major merger that could reshape the competitive landscape of the affordable luxury sector. The outcome of this case could set precedents for future mergers and acquisitions within the industry.

The FTC's lawsuit against the merger of Tapestry and Capri Holdings highlights concerns that the union would lead to higher prices and less competition in the affordable luxury market, negatively affecting consumers. Tapestry, the owner of brands like Coach, Kate Spade, and Stuart Weitzman, had planned to acquire Capri Holdings, which manages Michael Kors, Versace, and Jimmy Choo, to solidify its market position and expand globally. However, the FTC argues that such a merger would also harm the workforce and reduce competition for employees in the sector.

Both companies have responded by defending the merger's benefits, emphasizing that it would not stifle competition due to the fragmented and competitive nature of the industry. They intend to defend their position vigorously in court. The case is particularly notable as it is the first time the current administration has targeted the fashion sector for antitrust enforcement, reflecting a broader trend of heightened scrutiny on corporate consolidations. The outcome of this legal challenge is awaited with interest, as it will influence the strategies of other companies in the sector and possibly reshape future regulatory approaches to mergers and acquisitions in the fashion industry.

US sues to block USD 8.5 billion union of Coach, Michael Kors