The US Federal Trade Commission (FTC) has stepped in to block the takeover of the company that owns the fashion brand, Michael Kors.
Capri, which is also the owner of the Versace and Jimmy Choo brands, is the target of a takeover bid by fashion accessory giant Tapestry. The deal has been reported by BBC News to be worth $8.5bn (£6.9bn). Tapestry owns handbag makers Kate Spade and Coach, and had a net income last fiscal year of $928.10m.
However, the US competition watchdog, the FTC, has now sued to block the deal citing that it “…would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands.” In response Tapestry hit back, stating that "the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop". It added in a statement that "…in bringing this case, the FTC has chosen to ignore the reality of today’s dynamic and expanding $200 billion global luxury industry". Capri added in its own statement that "…this transaction will not limit, reduce, or constrain competition" as the two firms "operate in the fiercely competitive and highly fragmented global luxury industry".
The initial offer of a takeover was made in August; and the FTC responded in November to ask for more details on the potential deal. In a statement, the FTC stated its belief that the deal would give Tapestry a dominant share of the market; and it was therefore suing to stop it happening. It also added the concern that the reduced competition would have a potential impact on employees’ wages.
The deal has already receive clearance in the European Union and Japan.
