NEW YORK, Sept 9 (Reuters) - The U.S. Federal Trade

Commission urged a federal judge in New York to block Tapestry's

$8.5 billion merger with rival handbag maker Capri

Holdings ( CPRI ) at a trial on Monday, arguing it will

eliminate fierce competition in the market for "accessible

luxury."

The FTC argues the merger announced in August 2023 would

eliminate head-to-head competition between Tapestry's Coach and

Kate Spade brands and Capri's Michael Kors' brands, which has

resulted in better prices, discounts and promotions for

consumers and wages and workplace benefits for employees.

The deal would also give Tapestry a dominant share of the

"accessible luxury" handbag market, controlling over 50% of it

once the deal is completed. The regulator defined the

"accessible luxury" market as handbags sold between $100 and

below $1,000, which forms most of Coach and Kors' lines.

FTC Chief Trial Counsel Nicole Lindquist told U.S.

District Judge Jennifer Rochon in a packed courtroom that the

brunt of a merger would be borne by "the working and middle

class women of America."

In its questioning of Capri CEO John Idol, the FTC

showed evidence of emails between Idol and his deputies,

including Jaryn Bloom, president of North America retail for

Capri's Michael Kors brand, asking how Coach's outlets were

keeping prices down.

"Look at these prices!" Idol wrote in the emails, urging

his deputies to come up with better designs and solutions to

compete against Coach. In another email produced by the FTC,

Idol asks to talk to a deputy about the design of a Coach

handbag.

"They monitor and react to each other's every move,"

said Lindquist, the FTC lawyer.

Tapestry, in response, argues that the U.S. handbag

market is highly fragmented and competitive with low barriers

to entry and fickle consumer tastes. It also said FTC's analysis

misunderstands the handbag marketplace and the way consumers

shop and that "accessible luxury" is a notional concept.

Tapestry lawyer Lawrence Buterman said the FTC's

argument is divorced from the commercial reality of the handbag

market where customers are inundated with choice.

"The commercial reality is that customers have a Gucci

bag lined up next to a Kors bag, lined up next to a Calvin Klein

bag," he said.

A lawyer for Capri later told the court that Kors had

been losing relevance with shoppers since it peaked in 2016 and

that growing competition drove the average price for a Kors

handbag to $92, below the FTC's threshold of accessible luxury.

The FTC has sued to block several mergers over the past

year, making for a busy schedule.

The antitrust regulator is currently fighting to block

supermarket chain Kroger's ( KR ) acquisition of Albertsons ( ACI )

in a federal court in Portland, Oregon and has also sued

to block the $4 billion acquisition of Mattress Firm by mattress

manufacturer Tempur Sealy International ( TPX ).

Monday's trial is expected to last for a week and a half.

The trial follows the merger's approval by antitrust

regulators in Japan and the European Union earlier this year.