The Federal Trade Commission filed a lawsuit April 22 to block Tapestry Inc.’s $8.5 billion acquisition of Capri Holdings Ltd., saying it would not only hurt consumers but also the companies’ employees.
New York-based Tapestry’s operations include a 1.05 million-square-foot facility at the Jacksonville International Tradeport near Jacksonville International Airport, which distributes Coach brand products in North America.
When the companies announced their planned merger in August, Tapestry said it had 430 employees at the distribution center plus 200 temporary employees, which can triple during the peak holiday season.
Besides Coach, Tapestry sells goods under the Stuart Weitzman and Kate Spade brands.
London-based Capri sells goods under the Versace, Jimmy Choo and Michael Kors brands.
The FTC said in a news release the merger would give Tapestry “a dominant share of the ‘accessible luxury’ handbag market, a term coined by Tapestry to describe quality leather and craftsmanship handbags at an affordable price.”
It also said the companies combined employ 33,000 people worldwide and the merger would affect competition for employees.
“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,” said Henry Liu, Director of the FTC’s Bureau of Competition, in the release.
Both Tapestry and Capri issued statements defending the deal and saying they will continue to press to complete the merger.
“Tapestry has a strong record of not only innovating for consumers but also providing industry-leading wages and benefits for our employees. The combined company will continue to set the bar for both consumer and employee experiences,” the company said.
Both companies reported April 15 that the European Commission and the Fair Trade Commission of Japan had approved the merger.
Tapestry reported sales of $6.66 billion in the fiscal year ended July 1, 2023, and said the addition of Capri would increase annual sales to more than $12 billion.