Tapestry v. Federal Trade Commission: The $8.5bn Legal Battle that will shake the Fashion Industry
The Fashion Rundown
New York Fashion Week has been and gone, but it wasn’t the only major fashion event that took place last month. Fashion icon, Michael Kors, testified in a Federal Trade Commission lawsuit which was filed back in April which seeks to the block the multinational fashion holding company, Tapestry’s $8.5 billion acquisition of another fashion holding company, Capri, that would place six major fashion brands under one name.
Tapestry, which owns Coach, Kate Spade and Stuart Weizman agreed last year to purchase Capri, the owner of Michael Kors, Versace and Jimmy Choo; however, the deal has been in a state of uncertainty since the U.S Federal Trade Commission sued to block the deal around six months ago. This is because the Commission argues that the deal would ‘eliminate direct head-to-head competition between Tapestry’s and Capri’s brands’ and give Tapestry a ‘dominant share’ of the accessible luxury handbag market’ by putting Coach and Michael Kors, often categorised as affordable, middle-range handbags, under one roof.
Michael Kors, once hauled as the home of ‘accessible luxury’ in the early 2000s, is now more comfortably found in outlet and department stores. Kors founded his namesake brand at the tender age of 22 in 1981 and has prospered with decades of success. However, Michael Kors’ first quarter revenue has dropped more than 14% year-over-year, according to Capri Holdings 2025 fiscal results. Kors has blamed some of his dwindling sales on the new influencer-age as the more traditional modes of marketing of building brand prestige through exclusivity and heritage clashes with the fast-paced world of TikTok and Instagram influencers, leading to the likes of Michael Kors having no option but to adapt to the immediacy and engagement that influencers offer.
Thus, the proposed acquisition of Michael Kors under Tapestry would mark a significant shift in the competitive landscape, allowing the combined entity of Tapestry and Capri to leverage shared resources and enhance brand visibility and ultimately reposition itself in the accessible luxury market sector. The ruling in Tapestry v FTC will be a decisive step forward in this respect. The Federal Commission is arguing that the buyout would provide Tapestry with a 58% market share of the ‘accessible luxury’ handbag market. But of course, this is an incredibly narrow market to chase, thus the if the lawsuit goes in the Commission’s favour, it could shape the future of mergers and acquisitions.
The Importance of Antitrust/Competition Laws
Competition laws, known as antitrust laws in the U.S, were implemented in response to unfair business practices by corporate monopolies, which are more commonly known as ‘cartels’ in which competitors’ form agreement to control the market and drive-up prices. Since then, antitrust and competition laws prohibit businesses from engaging in anticompetitive mergers, price-fixing and attempts to monopolise the market. This is precisely why the Federal Trade Commission argues that the buyout will monopolise the leather bags and accessories market which will inevitably reduce competition and leave consumers with fewer affordable options.
The lawsuit raises issues that such consolidation could stifle innovation in the fashion and retail industry, sky-rocket prices and lead to complacent market leaders creating sub-par products. The Federal Trade Commission also highlighted the fact that a monopoly could also lead to an impact on employee benefits and pay as their bargaining power would have diminished. The level of scrutiny from the Federal Trade Commission has given towards this proposed merger, should be welcomed as the ruling will not only shape the future of Coach and Michael Kors who target the same audience, it will also set precedent as to how luxury markets should be operating.
Status of Pending Lawsuit
Prior to Tapestry v FTC, most fashion lawsuits have revolved around intellectual property rights. Take for example, the world-renowned Italian brand Gucci suing Guess Inc for its excessive use of the iconic Gucci double ‘G’ as well as the use of the colours green and red which eventually led to an out-of-court settlement. As it is predicted that Acts such as the federal Fabric Act, California’s Responsible Textile Recovery Act and New York’s Fashion Act will become law in the U.S, it signals the possibility of cases that concerns fashion companies’ commitment or rather non-commitment to Environmental, Social and Governance (ESG) practices will no longer slip through the cracks.
As it stands though, this eye-watering $8.5 billion legal battle is stalemate. The closing arguments were expected to take place at the end of last month and so we patiently wait for the decision to be handed down. An optimistic view of this proposed expansion is that it would lead to more efficient distribution channels and enriched product offering and enable the mid-luxury brands to profit from the quality leader and craftsmanship offered by the high-luxury brands at a more affordable price. However, a pessimistic and perhaps more realistic approach would be that if this multi-billion-dollar deal was to be allowed, it could lead dilute individual equites as opposed to providing the likes of Michael Kors with a new lease of life. With the French multinational holding company, LVMH (Louis Vuitton, Moet, Henessey) acquiring Tiffany & Co in 2021, and is now the most valuable company in Europe with a 22% global market share, the dreams of an ‘American LVMH’ through the merging of Tapestry and Capri seems more of a fantasy.
This article was written by Phoebe-Jean Grainger-Williams, you can contact Phoebe-Jean via the following email: [email protected]