Tapestry plans to appeal a US judge’s decision blocking its merger with Capri Holdings.
- The FTC claims the merger would create a large company capable of unfairly raising prices.
- Judge Rochon highlighted handbags’ significance in women’s fashion and daily life.
- Tapestry argues that the fashion industry remains competitive and fragmented.
- The company maintains that the acquisition is beneficial for consumers and the market.
Tapestry, known for its accessible luxury brands such as Coach, has announced its intention to challenge a recent US court ruling. The ruling, delivered by US District Judge Jennifer Rochon, blocked Tapestry’s proposed $8.5 billion (£6.7 billion) acquisition of Capri Holdings. This decision followed an eight-day trial where the Federal Trade Commission (FTC) argued that the merger would remove key competition between two major handbag companies, potentially leading to unfair price increases.
During the trial, the FTC positioned itself as a protector of consumer interests, maintaining that the merger would create a dominant player in the market. The FTC’s concerns were centred on an anticipation of diminished competition, resulting in a marketplace with reduced pricing control for consumers.
Judge Rochon dismissed the defence put forth by Tapestry and Capri, which suggested that handbags are non-essential and that consumers would dictate prices through their buying decisions. She emphasised that handbags hold considerable significance for many women, serving both as a medium of personal expression through fashion and as practical items needed daily.
In response to the ruling, a statement from Tapestry expressed disappointment and disagreement with the court’s decision, asserting that it was incorrect both legally and factually. The company argued that the fashion industry is vibrant, competitive, and populated with both well-established entities and new entrants.
Tapestry underscored their view that, despite the court’s findings, the acquisition of Capri is pro-competitive and benefits consumers. They reiterated their commitment to pursuing the merger, aligning with their responsibilities as outlined in the merger agreement.
Back in August 2023, Tapestry had announced the acquisition, which promised to bring together several esteemed brands under one roof, including Coach, Kate Spade, Versace, and Michael Kors. The intent was to establish a prominent US fashion entity, enhancing the market stature of these renowned labels.
Tapestry remains committed to challenging the ruling, firmly believing in the strategic benefits of the Capri acquisition.
