MObviously, the American federal government does not like handbag manufacturers. Or he likes them too much. By blocking, this Monday, April 22, the announced marriage, and freely agreed, between the two American leaders in the field, the Federal Trade Commission (FTC) attracted a volley of green wood from the buyer, the group Tapestry. “The FTC doesn’t understand consumers and how the market works”reacted the company to the announcement of the news.
Owner of the Coach, Kate Spade and Stuart Weitzman shoes brands, she intends to swallow for 8.5 billion dollars (around 7.96 billion euros) her counterpart Capri, whose catalog includes Michael Kors bags and accessories, fashion from Versace and shoes from Jimmy Choo. Together, they would constitute a large American luxury group, with 12 billion dollars in turnover and 33,000 employees worldwide. They would thus approach giants like LVMH, almost eight times bigger, or Kering, closer with its 20 billion euros in turnover.
Despite this modest global size, the merger worries the FTC for good reason. It would give the new group a predominant share in the market which it defines as “affordable luxury”. Because Coach and Michael Kors do not compete in the same category as Vuitton or Gucci. Their bags at 150 or 400 euros are ten times cheaper than the first prices of Europeans. It is the subtlety of the competition authorities’ work to determine the relevant market. Hence the endless controversies.
A more surprising argument
But the FTC added another, more surprising argument. In her statement, she emphasizes that this operation will also be detrimental to the employees of the two companies who will no longer be able to compete on salaries and hiring opportunities. Under the leadership of Lina Khan, appointed in 2022 by President Joe Biden, the administration is opting for a more political approach to the growing concentration in large American companies.
Hence the repeated proceedings against Web champions like Google or Microsoft, whose performances in terms of dominant position are much more spectacular than those of the kings of leather goods. The latter have not yet lost the game since the case has now been taken to court. We don’t always measure the political and economic impact of a small, fashionable bag.