U.S. Anti-Trust Trial Over Tapestry’s Bid for Capri Concludes

By Siddharth Cavale
NEW YORK (Reuters) – The U.S. anti-trust trial regarding Tapestry’s $8.5 billion bid to acquire Capri wrapped up on Monday. Tapestry’s legal team defended against allegations that the merger would increase consumer prices in an “intensely competitive” handbag market.

At the New York trial, the U.S. Federal Trade Commission (FTC) aimed to demonstrate that combining Tapestry’s brands—Coach, Kate Spade, and Stuart Weitzman—with Capri’s brands—Versace, Jimmy Choo, and Michael Kors—would result in fewer, more expensive handbag options for consumers compared to if the companies remained separate.

FTC counsel Abby Dennis drew comparisons between various methods of transportation to Washington D.C. from New York—including buses, trains, planes, and helicopters—to illustrate the challenges consumers face when switching options due to price constraints. She argued that American shoppers encounter similar difficulties regarding handbag purchases.

A U.S. federal judge is set to decide whether to block the merger, which was proposed in August 2023, or allow it to proceed. A ruling is anticipated within three weeks to three months, according to Tapestry.

James Weingarten, a former FTC chief trial counsel now with law firm Milbank in Washington D.C., noted, “The judge… has an avalanche of material thrown at her and needs some time to think through it. You cannot say this one is in the bag for either of the parties.”

During the seven days of hearings, both parties extensively discussed the concept of the “accessible luxury” marketplace. While the FTC presented an expert witness, economist Loren Smith, to assess the market, Tapestry’s attorneys challenged the financial models and methodologies used in the FTC’s analysis. Tapestry’s lead counsel, Lawrence Buterman, urged the judge to disregard the FTC’s findings entirely, stating, “The FTC can’t meet their burden under any standard,” while advocating for the merger’s approval.