FTC v. $TPR

Lina Khan weaves another head scratcher into the Tapestry of her legacy

To paraphrase Abraham Kaplan, “Give an FTC Chairperson a hammer, and she will find that everything she encounters needs pounding.”

Yesterday, the FTC announced that, despite EU, Japan, and China regulators all giving the green light to the Tapestry / Capri acquisition, the agency is persevering in its attempt to block the transaction. Such a commitment once again reminds us that the FTC, a truly independent-thinking body, is untethered to banal details like competitive dynamics and industry realities. Instead, the Biden administration position on mergers can be succinctly captured in one sentence:

I, for one, am very thankful Lina Khan has directed the latest blow from her hammer at the Tapestry / Capri deal. When Chinese regulators announced they were stepping aside, I found myself asking: But who will think of the Coach handbag consumers??

Ok, in all seriousness, protecting handbag consumers is not what this case is about. And I need to check my biases a bit because my first reaction—like many of you on Twitter—was to laugh at how remarkably stupid this case is. Fashion is a notoriously fickle industry. I can’t think of an industry that is less fragile (i.e., is self-correcting) from a competitive nature standpoint, except perhaps maybe generic pharmaceuticals. If you try to charge someone $10,000 for a Michael Kors purse, I’m like 99% sure they just won’t buy that purse. I’m also like 99% sure they can find a substitute somewhere. If I learned anything from The Devil Wears Prada (I didn’t), there are always other options, and there are always new entrants trying to get their foot in the door to the fashion industry. And if no one can buy a Michael Kors purse for a few years while others ramp up, well . . . do we care?