NEW YORK (Reuters) - Fashion holding company Tapestry has room to raise prices and lower discounts on rival Capri's Michael Kors brand if the companies merged, a top Tapestry executive testified on Tuesday as regulators sought to block the $8.5 billion deal.

Tapestry's brands include Coach, Kate Spade and Stuart Weitzman while Capri also owns Jimmy Choo and Versace.

On the second day of a trial in federal court in the Southern District Court of New York, the Federal Trade Commission presented slides to support its claim that the merger would lead to higher prices by ending competition between the rivals.

The slides included Tapestry's internal consumer research deck sent to CEO Joanne Crevoiserat in 2022 by Elizabeth Harris, senior vice president for global strategy and consumer insights.

"Coach has been priced on average $147 above Michael Kors for the last two years," a title in the slide deck read, suggesting room to increase Michael Kors' average unit retail price.

Harris responded that she saw the opportunity to raise prices because of the gap between what consumers pay for Coach and Michael Kors handbags, including taxes and fees.

However, that did not imply Tapestry would hike prices, she said, noting other factors such as brand creative work, design, and material costs in setting prices. Pricing also depends on how Tapestry executes these actions and the brand's desirability, she added.

Another slide showed Harris suggesting that Tapestry could reduce the levels of discounting on Kors' products.

The two slides omitted the additional cost factors when it was presented to Crevoiserat, Harris admitted. "This was just a quick data pull we had at the time and didn't dictate what could happen."

Harris said the deck resulted from Crevoiserat's directive to research market dynamics and identify suitable merger and acquisition targets, a process that began around mid-2022. She noted that the slides were created by someone on her team and were part of a "touch base" meeting with Crevoiserat in August 2022. She said she never saw the deck again after sending it to Crevoiserat.

Tapestry said it does not comment on pending litigation. It pointed Reuters to its pretrial statement that evidence will show that the proposed merger will benefit consumers.

The trial, overseen by District Judge Jennifer Rochon, is expected to end on Wednesday next week, with closing statements on Sept. 30.

A ruling could take anywhere between one to three months after that, lawyers for Tapestry said.

(Reporting by Siddharth Cavale in New York)