Fashion
FTC reportedly considering blocking major fashion merger
The Federal Trade Commission is preparing to sue to block a mega-merger in the luxury fashion sector, Tapestry's $8.5 billion takeover of Capri Holdings, two people with knowledge of the matter said.
The five FTC commissioners are expected to meet next week to discuss the case, a decision that could precede a formal vote on whether to pursue legal action, the sources said. The people, who were not authorized to discuss the deliberations, said it was always possible the agency would choose not to proceed.
The deal, intended to bring together brands such as Tapestrys Coach and Kate Spade with Capris Versace and Michael Kors, would create an American luxury conglomerate to compete with European powerhouses like Louis Vuitton's parent company, LVMH, and Kering, the owner of Gucci.
Cases of monopoly in the fashion industry are rare, as there is no shortage of new brands seeking to undercut traditional brands. This is a paradigmatic part of the economy with high competition, said Howard Hogan, chairman of the fashion, retail and consumer practice at law firm Gibson Dunn.
Investors are increasingly betting against the completion of the deal announced in August last year: Capri shares have fallen more than 20 percent this year, while Tapestrys shares have gained 6 percent. (Typically, the buyout target's shares gain while the buyer's shares fall.) Shares of Capris fell further in Wednesday trading, while those of Tapestrys gained.
The FTC has been reviewing the deal for months, even though it has been approved by regulators in the European Union and Japan. U.S. regulators could argue that putting Michael Kors and Coach under the same roof could limit the need for those brands to compete on price, which could, in turn, make their products more expensive for consumers.
Tapestry and Capri could, in turn, bear witness to the rise of new brands like Cult Gaia and Aupen, which celebrities like Taylor Swift helped to make it popular.
The matter could also be subject to political scrutiny. Regulators sometimes file antitrust lawsuits if they believe a case is likely to set a precedent that can be used in future cases, as the Justice Department did thirty years ago in its failed attempt to block Gillettes' takeover of a luxury fountain pen company, said William Kovacic, former chairman of the FTC.
But the Tapestry-Capri deal, Mr. Kovacic added, is not a very attractive deal as a way to protect the oppressed.
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Sources 2/ https://www.nytimes.com/2024/04/17/business/dealbook/ftc-tapestry-capri-coach-michael-kors-versace.html The mention sources can contact us to remove/changing this article |
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