As of Monday, Tapestry Inc. has officially appealed the court decision blocking its $8.5 billion acquisition of Capri Holdings. But the appeal is “an extremely uphill battle,” according to James Weingarten, an antitrust partner at Milbank and former FTC chief trial counsel.
The decision leaves Tapestry with little legal ground to argue — a necessity for a successful appeal, he said.
“Good grounds for appeal are legal issues, not factual issues,” and in this case, the court’s ruling was based heavily on facts, specifically Tapestry’s own documentation, said Weingarten. Judge Jennifer Rochon’s ruling cited years of internal documents from both Tapestry and Capri, in which they describe each other as “close competitors” in the accessible luxury market.
“You and your own documents said that if this deal goes through, you’re going to raise prices,” Judge Rochon said in the ruling, casting doubt on Tapestry’s current claim that the merger would be pro-competitive.
According to Weingarten, grounding the decision in factual findings, including “credibility determinations,” creates a nearly insurmountable barrier for Tapestry. “The appellate court is never going to say, ‘Well, we read the documents, and we disagree that this witness was not credible,’” Weingarten said. An appeal with a legal precedent, however, would have legs, he said.
The case sets a precedent for future mergers in the luxury market. Judge Rochon acknowledged the “accessible luxury” market Tapestry and Capri had identified as being a part of, establishing a “pro-plaintiff, pro-enforcement precedent” that could make it easier for the FTC to block similar deals. “If the documents are strong and the FTC thinks there’s a case, no industry is exempt,” Weingarten said, explaining that the may embolden regulators to scrutinize inner-category mergers in the fashion industry and beyond.
Tapestry’s process of acquiring Capri Holdings started in August 2023, when the former announced plans to acquire the company via a $8.5 billion deal. It aimed to broaden its accessible luxury portfolio and strengthen its position in the global market with brands like Coach, Versace and Jimmy Choo under one roof. The FTC first became involved shortly after the deal was announced in August 2023, initiating an investigation due to concerns about reduced competition in the accessible luxury market. The corresponding trial started on September 9.
For Tapestry, the appeal may be more of a formality required under its merger agreement than a viable pathway to completing the acquisition. Weingarten said the initial ruling may have marked the end of Tapestry’s acquisition ambitions with Capri. Tapestry could not be reached in time for this story’s publication.
