Pedestrians walk past a Coach store and a Michael Kors store.
Scott Olson | Getty Images
A federal judge blocked Tapestry acquisition of Corsair the following Thursday a brief test last month in New York.
In her order, Judge Jennifer Rochon granted the Federal Trade Commission’s request for a preliminary injunction to block the proposed merger, which would marry the two largest American luxury houses and consolidate six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s. Versace, Jimmy Choo and Michael Kors.
Tapestry’s stock jumped 10% after the order was filed, while Capri’s stock plunged about 50%.
Representatives for Tapestry and Capri did not immediately respond to requests for comment.
Rochon’s reasoning behind the order was not immediately clear. A detailed notice was filed under seal and is currently not accessible to the public.
The former rivals and long-time competitors announced $8.5 billion deal more than a year ago, but the Federal Trade Commission sued to block it in April and requested a preliminary injunction to terminate the agreement.
The FTC argued that if the companies merged, it would harm consumers by making the market for affordable handbags less accessible and leave employees with lower wages and benefits. Tapestry argued that consumers would be better off if it merged with Capri because it would allow them to follow trends more quickly, offer better products and reach more customers.
The move comes as consumers balk at high prices for food, clothing and other goods after years of high inflation. The Biden administration and Democratic Vice President Kamala Harris have pushed the federal government to use its power to maintain competition and help keep prices low.
The FTC, under President Joe Biden, has moved to block mergers and acquisitions in the grocery, technology and apparel industries.
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