Unlock the US Election Countdown newsletter for free
The stories that matter on money and politics in the race for the White House
The heavy hitters at the Partnership for New York City are perhaps not the target market for Coach and Michael Kors. But the two “accessible luxury” brands are suddenly of interest to the Manhattan-based non-profit civic group whose mission is to stand up for the Big Apple’s business interests, particularly Wall Street and commercial real estate.
Last week, PFNYC released a public letter it sent to the pair of US senators from New York as well as two senior members of the House of Representatives New York delegation asking them to denounce a lawsuit brought by the US Federal Trade Commission, the competition authority. The FTC is seeking to block two fashion companies, Tapestry and Capri, from combining. The combined company would boast such brands as Coach, Michael Kors and Kate Spade with an enterprise value exceeding $20bn.
The FTC argues that consumers would be harmed if Coach and Kors, currently part of different companies, would no longer be competing against each other in the upper middle-class, “accessible luxury” handbag category.
The New York angle is that both companies are based in the city and Joanne Crevoiserat, the chief executive of Tapestry, is an executive committee member of the PFNYC. The letter stated that the FTC action was “ideologically motivated” and a “clear case of regulatory over-reach”.
Outside groups sharing views on antitrust litigation is not unusual. But among the boldfaced names in PFNYC are top mergers and acquisitions bankers and lawyers whose multimillion-dollar bonuses depend on a thriving deals marketplace. Many of these Masters of the Universe are also Kamala Harris supporters or fundraisers including the likes of Blair Effron, Brad Karp and Rodgin Cohen.
Should Harris win the US presidential election, a question emerging is whether she will jettison FTC chair Lina Khan and the Department of Justice’s Jonathan Kanter, who have both aggressively litigated corporate consolidation and even tightened the so-called merger guidelines, their rubric used to evaluate deals.
Wall Street and the C-suite have enormous influence in New York City politics. President Joe Biden has, to a surprising extent, kept corporate interests at arm’s length, a posture that some New Yorkers are undoubtedly looking to change in the next administration and the PFNYC intervention is a portent of that.
The PFNYC said the Tapestry/Capri merger would help prop up the New York fashion industry, which it says has faded in recent years, and that the US deserved a luxury national champion in the way Europe had LVMH. Tapestry additionally adds that the FTC’s definition of the handbag market is arbitrary and constrained (at one point it wondered if duffel bags and backpacks could count as a type of handbag).
In an interview with the Financial Times, Kathryn Wylde, president and chief executive of the PFNYC, reiterated the view that the Biden regulators were making “politicised” and “inconsistent” choices in enforcing antitrust law, but expressed surprise when I told her that the FTC commissioners had voted 5-0, including its Republican members, to block Tapestry/ Capri.
Still, parts of the FTC’s case remain novel and will come under scrutiny. The agency says that so-called serial acquirers — companies that repeatedly buy smaller competitors as their primary growth strategy — are newly worthy of review.
Harris’s views on competition and economic issues themselves remain a mystery. She has condemned price gouging and floated a wealth tax but her longtime ties to Wall Street and Silicon Valley have given the billionaire class hope that she will not be so tough if elected president.
One lesson from New York, however, is that style matters perhaps as much as policy. Given how much big business contributes in taxes and philanthropy in the Big Apple, financiers almost demand tokens of respect and flattery in exchange. Wylde herself revealed her group’s need for support when New York City elected a new and apparently more solicitous mayor.
“This is a great relief,” Wylde told New York Magazine in 2022. “We have eight years of a mayor who was completely disparaging of wealth and business, and New York City barely survived it. Adams [the new mayor] has been very clear that New York City needs corporations, needs the wealthy, that we have always needed them, and we don’t want to demonise them.”