After the Southern District of New York blocked the $8.5 billion merger between Coach-parent Tapestry and Michael Kors owner Capri Holdings, Susan Scafidi, director of Fordham Law’s Fashion Law Institute, told Business of Fashion that the ruling shrinks the likelihood of the deal’s completion. The blocking championed the Federal Trade Commission’s primary argument that if Tapestry and Capri were to come together, they could raise prices, lower wages, and eliminate competition in the sector.
Tapestry has said it will appeal the decision but the ruling significantly shrinks the likelihood of the deal’s completion. “It may be that delay equals death,” said Susan Scafidi, founder of the Fashion Law Institute at Fordham Law School.
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The ruling championed the FTC’s primary argument that if Tapestry and Capri were to come together, they could raise prices, lower wages for workers and threaten the livelihood of other brands that also offer handbags in the $100 to $1,000 range.
This conclusion, however, amounts to a misunderstanding of how consumers actually shop, retail experts said. While Coach and Michael Kors refer to each other as main competitors, a fact that Rochon cited multiple times in her opinion, the handbag space is rife with options under $1,000, from entry-level designer pieces (albeit a limited selection) by Chloé and Loewe to emerging brands like Staud and DeMellier. The secondhand market opens up another sea of choices. During the trial last month, Tapestry attorney Lawrence Buterman presented to the judge a Chanel bag the company procured for $900 from an undisclosed vendor.
“The court seems to really think that buying one brand is very much like buying another, like the way you might buy one hammer over another,” said Scafidi. “It leaves no space for understanding that trends change, that brand’s fortunes can rise and fall overnight and that fashion is not predictable in a way that a commodity product might be.”