The companies behind well-known fashion brands such as Michael Kors, Versace and Coach want to merge – but US antitrust watchdogs are against it. They fear higher handbag prices.
US competition watchdogs want to prevent the billion-dollar deal that is intended to bring well-known fashion brands such as Coach, Michael Kors and Versace under one roof. The regulator FTC argued in a lawsuit that the merger could lead to higher prices, especially for handbags and accessories. The companies want to continue fighting for the takeover.
The merger, worth around $8.5 billion, was announced in August. The US group Tapestry, which owns the Coach, Kate Spade and Stuart Weitzman brands, wants to buy the Capri holding company, which controls Michael Kors, Versace and Jimmy Choo.
The FTC emphasizes that Coach and Michael Kors in particular are fierce competitors in the handbag market – and that the takeover would give the joint company a dominant position in the market in the USA. Tapestry was already in a buying mood and the merger will make further acquisitions of competitors even easier. Together, the companies have around 33,000 employees worldwide.
The supervisory authority fundamentally misunderstood the market
Tapestry boss Joanne Crevoiserat told the financial service Bloomberg that the two companies compete with hundreds of other brands. “The FTC has fundamentally misunderstood the market and consumer shopping behavior,” she criticized. There are a variety of brands on the market at different prices. They will defend the deal in court and continue to hope to complete it this year.
With the takeover, Crevoiserat wants to expand its position in the so-called “affordable luxury segment”, in which the items are high quality but cheaper than from luxury brands such as Louis Vuitton from the European conglomerate LVMH. Coach and Michael Kors have been fighting for the top position in the American handbag market in recent years. Most recently, Tapestry and Coach were in the lead. The aim of the merger is also to expand international business: Michael Kors is stronger in Europe, while Coach is doing good business in China.
Source: Stern
