FTC sues to block Coach parent Tapestry's acquisition of Capri Holdings

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The U.S. Federal Trade Commission on Monday sued to block the $8.5 billion acquisition of Capri Holdings by Coach and Kate Spade's parent company, Tapestry . The move by regulators brings at least a temporary halt to a deal that would marry two major names in American luxury retail and put six fashion brands under a single company: Tapestry's Coach, Kate Spade and Stuart Weitzman and Capri's Versace, Jimmy Choo and Michael Kors. With the transaction, the luxury brands could be poised to better compete with European luxury names, such as Burberry and LVMH's Louis Vuitton. In a news release, the FTC said the combined company would harm shoppers and employees. It said Tapestry and Capri "currently compete on everything from clothing to eyewear to shoes." "With the goal to become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry," Henry Liu, director of the FTC's Bureau of Competition, said in the release. "This deal threatens to deprive consumers of the competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions." Tapestry argued the federal agency "fundamentally misunderstands both the marketplace and the way in which consumers shop." In a statement, the company said it must win the business of consumers who increasingly shop across brands, channels and price points.