The FTC Is Suing to Block a Mega-Merger That Would Unite Coach and Michael Kors The deal between the fashion houses' parent companies would be worth an estimated $8.5 billion.

The Federal Trade Commission (FTC) is suing to block a mega-merger that would unite luxury fashion brands, Michael Kors and Coach.

Coach's parent company, Tapestry (which also oversees fashion brands Kate Spade New York and Stuart Weitzman) is attempting to buy Michael Kors' parent company, Capri (which also oversees Versace and Jimmy Choo), in a deal that was set to cost an estimated $8.5 billion.

But in Monday's filing, the FTC claims that the merger would eliminate competition between the fashion houses and could potentially reduce employee wages and benefits.

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"The proposed merger threatens to deprive millions of American consumers of the benefits of Tapestry and Capri's head-to-head competition, which includes competition on price, discounts and promotions, innovation, design, marketing, and advertising," the FTC said, per Reuters.

The new mega-company would have an estimated 33,000 employees globally.

Tapestry CEO Joanne Crevoiserat told Reuters that the FTC was "fundamentally misunderstanding" the fashion marketplace of today, arguing that competition for talent goes beyond just the fashion industry.

"Capri Holdings strongly disagrees with the FTC's decision," Capri asserted in a statement. "The market realities, which the government's challenge ignores, overwhelmingly demonstrate that this transaction will not limit, reduce, or constrain competition."

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The deal was first set into motion in August 2023 when Tapestry agreed to buy Capri to create a bigger U.S.-based fashion house that would have a chance to compete with larger European ones.

Capri Holdings was down over 17.5% year-over-year as of Tuesday morning while Tapestry was down just over 5% in the same period.