Laura Giardina
Editor-in-Chief, Delaware Journal of Corporate Law, Volume 50
After a string of losses,[1] the Federal Trade Commission (“FTC”) obtained a preliminary injunction halting the merger of Tapestry, Inc. and Capri Holdings Limited.[2] Tapestry owns the Coach, Kate Spade New York, and Stuart Weitzman brands,[3] while Capri owns Versace, Jimmy Choo, and Michael Kors.[4] The District Court for the Southern District of New York granted the injunction as the FTC was able to show “it [was] likely to succeed in convincing a federal court of appeals that the transaction violates Section 7 [of the Clayton Act].”[5] Additionally, in looking at the balance of equities, the court found the public would suffer irreparable harm by denying the injunction.[6] A key finding was the court agreeing with the FTC that “accessible luxury” was a relevant market within the larger handbag marketplace.[7] Despite initial plans to appeal the injunction,[8] the companies decided to scrap their merger plans, bringing the proposed creation of a major luxury fashion house to an end.[9]
In August 2023, Capri Holdings announced Tapestry, Inc., would acquire Capri with “Capri Holdings shareholders [to] receive $57.00 per share in case for a total enterprise value of approximately $8.5 billion.”[10] The companies announced the merger would create “a powerful house of iconic luxury and fashion brands,” grow Tapestry’s portfolio and global reach, and create “over $200 million in run-rate cost synergies” through “operating cost savings and supply chain efficiencies.”[11]
In April 2024, the FTC sued to stop the deal.[12] The FTC claimed the merger would stop the head-to-head competition between the companies and that this competition was benefitting consumers because the companies competed “on price, discounts and promotions, innovation, design, marketing, and advertising.”[13] Additionally, the FTC argued the merger would hurt employees by eliminating the need to compete for workers, “negatively affect[ing] employees’ wages and workplace benefits.”[14]
One key point of contention in the litigation was defining the market segment.[15] “Determining the relevant market ‘is a necessary predicate to deciding whether a merger contravenes the Clayton Act.’”[16] The FTC argued accessible luxury is a distinct submarket within the handbags industry. The court agreed there can be submarkets within a larger product market, recognizing, “Chevrolets and Fords might be interchangeable . . . , but Chevrolets and Lamborghinis are probably not.”[17]
Ultimately, the court applied the Brown Shoe factors.[18] The court defined the factors as including, “industry or public recognition of the submarket as a separate economic entity, the product’s peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors.”[19] Here, the court agreed with the FTC that the brands belonged to an accessible luxury market based upon “unique production facilities, distinct prices, industry recognition, and sensitivity to price changes.”[20]
In the end, Tapestry and Capri decided to scrap the deal. A press release issued by Capri explained that the merger agreement outside date of February 10, 2025, could not be met because the agreement required “U.S. regulatory approvals [] unlikely to be met” by the February deadline.[21] Coach, Kate Spade New York, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors will not combine under the roof of a single house of iconic luxury and fashion brands after all.
About the Author
About the Author: Laura is the Volume 50 Editor-In-Chief of Delaware Journal of Corporate Law. Laura is a 3L student who will be graduating summa cum laude in May 2025. During law school, she interned with Vice Chancellor Paul A. Fioravanti in the Delaware Court of Chancery, and Magistrate Judge Sherry R. Fallon in the District of Delaware. After graduation and passing the bar (the first time), Laura will be an attorney at The Marta Firm, LLC, in Hockessin, DE.
[1] Maria Raptis, et al., FTC Blocks Tapestry/Capri ‘Affordable Luxury’ Deal, but Court Applies Traditional Horizontal Merger Analysis, Skadden (Nov. 1, 2024), https://www.skadden.com/insights/publications/2024/11/ftc-blocks-tapestry-capri.
[2] FTC v. Tapestry, Inc., No. 24-cv-03109, 2024 WL 4647809 (S.D.N.Y Nov. 1, 2024).
[3] Tapestry, https://www.tapestry.com/ (last visited Mar. 28, 2025).
[4] Capri Holdings, https://capriholdings.com/corporate-overview/default.aspx (last visited Mar. 28, 2025).
[5] Tapestry, Inc., 2024 WL 4647809, at *69.
[6] Id.
[7]Id. at *24.
[8] Capri Holdings Intends to File Notice of Appeal, Capri Holdings (Oct. 24, 2024), https://www.capriholdings.com/news-releases/news-releases-details/2024/CORRECTING-and-REPLACING-Capri-Holdings-Intends-to-File-Notice-of-Appeal/default.aspx.
[9] Savyata Mishra & Ananya Mariam Rajesh, Coach Parent Tapestry Pulls $8.5 Bln Bid for Capri After FTC Roadblock, Reuters (Nov. 14, 2024, 12:42 PM), https://www.reuters.com/markets/deals/coach-parent-tapestry-terminates-85-billion-deal-capri-2024-11-14/.
[10] Tapestry, Inc. Announces Definitive Agreement to Acquire Capri Holdings Limited, Establishing a Powerful Global House of Iconic Luxury and Fashion Brands, Capri Holdings (Aug. 10, 2023), https://www.capriholdings.com/news-releases/news-releases-details/2023/Tapestry-Inc.-Announces-Definitive-Agreement-to-Acquire-Capri-Holdings-Limited-Establishing-a-Powerful-Global-House-of-Iconic-Luxury-and-Fashion-Brands/default.aspx.
[11] Id.
[12] FTC Moves to Block Tapestry’s Acquisition of Capri: $8.5 Billion Deal Would Eliminate Competition Between Coach, Kate Spade, and Michael Kors, FTC (Apr. 22, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-moves-block-tapestrys-acquisition-capri.
[13] Id.
[14] Id.
[15] FTC v. Tapestry, Inc., No. 24-cv-03109, 2024 WL 4647809, at *10 (S.D.N.Y Nov. 1, 2024).
[16] Id. at *7.
[17] Id. at *10 (citing ProMedica Health Sys., Inc. v. FTC, 749 F.3d 559, 565 (6th Cir. 2014)).
[18] Is Antitrust Back in Fashion? Implications of the FTC’s Win in the Tapestry/Capri Merger, Hogan Lovells (Nov. 7, 2024), https://www.hoganlovells.com/en/publications/is-antitrust-back-in-fashion-implications-of-the-ftcs-win-in-the-tapestry-capri-merger.
[19] Tapestry, Inc., 2024 WL 4647809, at *9 (citing Brown Shoe Co. v. U.S., 370 U.S. 294, 325 (1962)).
[20] Is Antitrust Back in Fashion?, supra note 18.
[21] Tapestry, Inc. Announces Definitive Agreement to Acquire Capri Holdings Limited, supra note 10.
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