FTC seeks to block Kate Spade, Michael Kors merger

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The Federal Trade Commission is asking a federal judge in New York to block the $8.5 billion merger of Tapestry, the company behind Coach, Kate Spade, and Capri, which controls Michael Kors.

In April, the FTC sued to block the sale, arguing that these brands dominate what's known as the "accessible luxury" market and that if they combined, consumers would suffer by paying higher prices.

"This has to be the first time the focus of a federal court hearing turned to a $279 Kate Spade tote described as 'colorful, joyful, feminine, green and white seen on Emily in Paris," Senior investigative reporter and correspondent Aaron Katersky said on "Good Morning America," on Tuesday. Tapestry argues the FTC is ignoring the reality of a marketplace, in which consumers have a lot of choices, suggesting it takes a mere stroll through Bloomingdale's or Macy's to see Gucci, Kors and Calvin Klein bags fighting for attention.

Michael Kors himself testified last month during a hearing, telling the judge there's already plenty of competition for handbags, noting that he learned about one brand when he saw a photo of pop superstar Taylor Swift wearing an Aupen bag similar to those made by Kate Spade. Kors also testified his handbags have "reached a point of brand fatigue" and a lawyer arguing in favor of the merger said it would revitalize the Michael Kors brand, so consumers have yet another choice. The goal, he said, is to sell more handbags to consumers.Copyright © 2024 ABC News Internet Ventures.

 

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Michael Kors CEO Admits Brand Needs Help as Tapestry Acquisition Faces ScrutinyDuring a hearing examining Tapestry's proposed acquisition of Capri Holdings, Michael Kors CEO Cedric Wilmotte revealed that the brand's turnaround efforts have fallen short. He testified that major parts of their reinvention plan are on hold and that Tapestry is better equipped to complete the job. Wilmotte also expressed concerns about the brand's performance in private emails, citing discounting strategies and intense competition.
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