Capri, the parent company of fashion brands Michael Kors and Jimmy Choo, saw its stock tank by more than 50% in pre-market trading on Friday after a federal judge blocked its pending $8.5 billion merger with Coach owner Tapestry.

US District Judge Jennifer Rochon struck down the merger that would have seen the two American luxury giants combine to bring Coach, Kate Spade, Versace, Jimmy Choo and Michael Kors under one roof.

Rochon ruled on Thursday that “antitrust has come into fashion” and that a merger between the two companies “will substantially lessen competition in the market for accessible-luxury handbags,” according to Yahoo Finance.

The US companies sought to merge in order to better compete with their larger European rivals that own luxury brands like Gucci and Hermes. Paris-listed LVMH owns 75 brands, including jeweler Tiffany and fashion labels Louis Vuitton and Dior.

The Federal Trade Commission sued to block the deal in April, saying it would eliminate “direct head-to-head competition” between the top two US handbag makers.

Should the deal fall through, “Capri could potentially seek another suitor” as it grapples with execution missteps at Michael Kors, said Dana Telsey of Telsey Advisory Group.

“Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants,” Tapestry said in a statement released on Thursday.

“We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer.”

Tapestry’s shares rose nearly 13%. Analysts said the deal would have been an added risk to the Coach parent even though it was well-positioned to revive Capri.

The FTC under its chair, Lina Khan, has been aggressive in blocking mergers and enforcing antitrust laws — drawing criticism from business advocates.

The FTC sued to block Kroger’s proposed $24.6 billion acquisition of Albertsons, alleging it would be anti-competitive and lead to higher grocery prices.

If the deal had been allowed to go through, it would have been the largest supermarket merger in US history.

The Khan-led FTC also moved to block Tempur Sealy’s proposed $4 billion acquisition of Mattress Firm.

In fiscal year 2022, the FTC filed six merger lawsuits. By comparison, it averaged three lawsuits annually in the previous 20 years.

Between June 2021 and November 2023, the FTC challenge 10 mergers and saw 19 mergers abandoned as a result of investigations and complaints.

Khan’s future has been a source of speculation during the current election cycle as donors to Vice President Kamala Harris, including LinkedIn co-founder Reid Hoffman, have urged the Democrat not to bring her back should she win the election.

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