The Federal Trade Commission filed a lawsuit on Monday to block Tapestry's $8.5 billion acquisition of Capri Holdings, citing concerns about reduced competition and increased prices in the affordable luxury sector. The proposed deal would see Tapestry, the parent company of Coach, Kate Spade, and Stuart Weitzman, acquire Capri, which owns Michael Kors, Versace, and Jimmy Choo. The FTC argued that the merger would harm consumers who benefit from the competition between the two companies, as well as the 33,000 workers employed by both firms worldwide. Henry Liu, director of the FTC's Bureau of Competition, stated that Tapestry's goal to become a serial acquirer could lead to a monopoly in the fashion industry, impacting both consumers and workers negatively.

Tapestry rejected the FTC's claims, stating that the agency does not understand the marketplace or consumer behavior. The company argued that the deal would not limit competition and that the luxury industry is dynamic and expanding. Tapestry had announced the acquisition of Capri in August 2023, with the combined companies generating over $12 billion in sales in 2022. The deal had received regulatory approval in the European Union and Japan but faced scrutiny from the FTC in the United States.

The lawsuit is part of a broader effort by the FTC, under the leadership of Chair Lina Khan, to challenge big business mergers across various industries. While some of these efforts have been unsuccessful, the agency is determined to prevent anti-competitive practices. The fashion deal between Tapestry and Capri would create an American luxury conglomerate to compete with European giants like LVMH and Kering, although it would be significantly smaller in size. Traders have expressed doubts about the deal's approval, with Capri's shares falling and Tapestry's rising in anticipation of the outcome.