Capri Holdings Limited ( CPRI ) shares are trading lower on Tuesday, together with Tapestry, Inc. ( TPR ) . 

The Federal Trade Commission filed a lawsuit aiming to halt Tapestry’s $8.5 billion purchase of Capri Holdings ( CPRI ). 

The acquisition seeks to combine three close competitors – Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand, per the FTC.

“With the goal to become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry,” said Henry Liu, Director of the FTC’s Bureau of Competition. “This deal threatens to deprive consumers of the competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions.”

FTC said the merger proposal jeopardizes the advantages of Tapestry and Capri’s direct competition for millions of American consumers. These benefits encompass price rivalry, discounts, innovation, design, marketing, and advertising.

“The market realities, which the government’s challenge ignores, overwhelmingly demonstrate that this transaction will not limit, reduce, or constrain competition,” Capri Holdings ( CPRI ) said in a press release. 

The U.S. FTC is the only regulator that did not approve this transaction, which received required approvals from all other jurisdictions, the company added. 

In bringing this case, the FTC has chosen to ignore the reality of today’s dynamic and expanding $200 billion global luxury industry, Tapestry said in a press release.

“We have strong legal arguments in defense of this transaction and look forward to presenting them in court and working expeditiously to close the transaction in calendar year 2024,” Tapestry added.

Price Action: TPR shares are trading lower by 0.67% to $40.04 at the last check Tuesday, while CPRI shares are trading lower by 3.13% to $36.79.