The Federal Trade Commission (FTC) filed a lawsuit on April 22, seeking to prevent Coach’s parent company Tapestry from acquiring Capri Holdings, the parent company of well-known fashion brands Michael Kors, Jimmy Choo, and Versace, for $8.5 billion (equivalent to RMB 61.588 billion). Several antitrust lawyers have stated that the FTC has rarely conducted antitrust reviews on high-end fashion mergers and acquisitions, which may set a precedent for regulating transactions between luxury goods.
The FTC claims that this merger will eliminate direct competition between the two luxury brands and create a giant enterprise with approximately 33000 employees. The FTC also stated that the proposed merger may deprive millions of American consumers of opportunities to benefit from competition in price, discounts and promotions, innovation, design, marketing, and advertising.
Tapestry hopes to build an American fashion giant that can effectively compete with Louis Vuitton (LV). It proposed to acquire Capri Holdings in August last year, but the FTC requested Tapestry to provide more information about the transaction in November. In early April this year, the transaction between the two companies obtained unconditional permission from the EU and Japan’s antitrust regulatory authorities, which will integrate top luxury brands such as Kate Spade and Jimmy Choo together. Although investors are skeptical about whether the transaction can be approved, most analysts expect it to be completed before August 10th.
