BREAKINGVIEWS-Kate Spade deal veto is lucky dip for trustbusters

Reuters04-23

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Jonathan Guilford

NEW YORK, April 23 (Reuters Breakingviews) - US competition cops want to stop Tapestry, owner of the handbag brand, from buying rival Capri. The $8.5 bln merger is a tempting target: well-known products, few political issues, and none of Big Tech’s mighty resources. That offers a chance to road-test novel legal theories.

Full view will be published shortly.

Follow @JMAGuilford on X

CONTEXT NEWS

The U.S. Federal Trade Commission on April 22 filed an administrative complaint and simultaneously authorized a lawsuit in federal court to block Tapestry’s $8.5 billion acquisition of Capri.

The complaint charges that the two companies dominate the market for “affordable luxury” handbags. It defines these as mass-market bags, manufactured in Asia from high-quality materials and sold at mid-market prices.

The complaint notes that new guidelines issued in 2023 argue that a merger is illegal if it substantially lessens intense, head-to-head competition regardless of market share.

Capri shares fell as much as 3.1% to $36.79 in early trading on April 23. Tapestry’s cash offer values the shares at $57 each. Tapestry shares were down as much as 3.9% at $38.73.

(Editing by Peter Thal Larsen and Sharon Lam)

((For previous columns by the author, Reuters customers can click on Jonathan.Guilford@thomsonreuters.com; Reuters Messaging: Jonathan.Guilford.thomsonreuters.com@reuters.net))

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