Pedestrians walk past a Coach store and a Michael Kors store.
Scott Olson | Getty Images
A federal judge blocked Tapestry’s acquisition of Capri on Thursday following a brief trial last month in New York.
In her order, Judge Jennifer Rochon granted the Federal Trade Commission’s motion for a preliminary injunction to block the proposed merger, which would marry America’s two largest luxury houses and put six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors.
Tapestry’s stock surged 10% after the order was filed while Capri’s plunged about 50%.
Representatives for Tapestry and Capri didn’t immediately return requests for comment.
Rochon’s reasoning behind the order wasn’t immediately clear. A detailed opinion was filed under seal and isn’t currently accessible to the public.
The former rivals and longtime competitors announced the $8.5 billion deal more than a year ago but the Federal Trade Commission sued to block it in April and sought a preliminary injunction to stop the agreement.
The FTC argued if the companies merged, it would harm consumers by making the affordable handbag market less accessible and would leave employees with worse salaries and benefits. Tapestry argued consumers would be better off if it merged with Capri because it would allow them to keep up with trends faster, offer better products and reach more customers.
The decision comes as consumers balk at high prices for food, apparel and other goods after years of elevated inflation. The Biden administration, and Democratic presidential candidate Vice President Kamala Harris, have pushed for the federal government to use its power to maintain competition and help keep prices low.
The FTC under President Joe Biden has moved to block mergers and acquisitions in the grocery, technology and apparel spaces.
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