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The US competition watchdog has sued to block fashion accessory giant Tapestry’s $8.5bn (\u00a36.9bn) takeover of rival Capri.<\/b><\/p>\n
Tapestry owns handbag makers including Coach and Kate Spade, while Capri’s brands include Michael Kors.<\/p>\n
The US Federal Trade Commission (FTC) said if allowed, “the deal would eliminate direct head-to-head competition between Tapestry\u2019s and Capri\u2019s brands”.<\/p>\n
In response Tapestry said “the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop”.<\/p>\n
Together, the firms employ about 33,000 staff globally but the FTC argued the deal could reduce wages and their benefits.<\/p>\n
Coach and Kate Spade are known for what their parent firm calls “accessible luxury” handbags – quality leather and craftsmanship products at affordable prices.<\/p>\n
Tapestry offered to buy Capri in August, hoping to create a US fashion giant that could compete against bigger European rivals such as <\/b>Chanel, Hermes and <\/b>Louis Vuitton parent LVMH.<\/p>\n
The FTC requested more information on the deal in November.<\/p>\n
Announcing its decision to take legal action, external<\/span><\/a>, the FTC said the deal would give Tapestry a dominant share of the market.<\/p>\n Tapestry said in a statement, external<\/span><\/a> that “in bringing this case, the FTC has chosen to ignore the reality of today\u2019s dynamic and expanding $200 billion global luxury industry”.<\/p>\n Capri, which also owns Versace and Jimmy Choo, said, external<\/span><\/a> “this transaction will not limit, reduce, or constrain competition” as the two firms “operate in the fiercely competitive and highly fragmented global luxury industry”.<\/p>\n It is unusual for the US regulator to try to block a high-end fashion merger.<\/p>\n