A U.S. District judge has halted the merger between the makers of Coach and Michael Kors handbags, saying it would reduce competition and hurt consumers.

In her ruling Thursday, U.S. District Judge Jennifer Rochon noted that Tapestry Inc. and Capri Holdings are “close competitors” and that the merger would result in “the loss of head-to-head competition” and raise prices for shoppers.

The decision followed seven days of testimony.

In after hours trading shares of Capri fell more than 50% while shares of Tapestry rose 12%.

The ruling came six months after the FTC sued to block Tapestry’s $8.5 billion acquisition of Capri, saying that the deal would eliminate direct competition between the fashion companies’ brands like Coach and Michael Kors in the so-called affordable luxury handbag arena.

The agency also said that the deal announced in August 2023 threatens to eliminate the incentive for the two companies to vie for employees and could depress employees’ wages and workplace benefits. The combined Tapestry and Capri would employ roughly 33,000 people worldwide, the agency said.

The two companies’ brands cover a wide array of items from clothing to eyewear to shoes. Tapestry has been on an acquisition binge for the past several years, and already owns Kate Spade New York, Stuart Weitzman and Coach. Capri owns the Versace, Michael Kors and Jimmy Choo brands.

Specifically, Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand are close rivals in the handbag market. The FTC had said that they continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or reduce handbag prices.

Tapestry said in an emailed statement to The Associated Press on Thursday that the decision granting the FTC’s request for a preliminary injunction was “disappointing” and “incorrect on the law and the facts.”

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

The company said it intends to appeal the decision, consistent with its obligations under the merger agreement.

Capri could not be immediately reached for comment.

Neil Saunders, managing director of GlobalData, said in a published note that the blocking of Tapestry’s acquisition of Capri will come as a blow to both companies.

“For Tapestry, it puts an end to the goal of becoming a bigger house of brands, and it leaves its plans for future growth in tatters,” he said. He noted that in a slower market, Tapestry will now need to rely on pushing its existing brands harder, which he believes will be challenging. He noted that the group could, in time, also look to make smaller acquisitions.

The ruling leaves Capri “in poor shape and, in betting on being acquired, has neglected the hard work that needs to be done to course correct many of its weak brands,” Saunders said.

Capri will either need to find another party to buy it or it will have to embark on a major reinvention plan, he said.

The Biden administration’s efforts to erase student debt for the 46 million Americans who are carrying college loans have repeatedly hit legal roadblocks. Now, the Department of Education is rolling out a new plan that could provide debt relief to 8 million borrowers who are suffering from financial hardships.

The new plan, unveiled Friday, would provide loan relief for approximately 8 million people with student loans who are suffering financial distress caused by other debts, ranging from medical expenses to costs due to a natural disaster. The Education Department said the proposed rules will be published in the Federal Register in the next few weeks, and that it expects to finalize the regulations in 2025. 

President Joe Biden made delivering debt relief to people with student loans a key policy issue of his 2020 campaign, but Republican-led states have sued to block many of those efforts, while the Supreme Court in 2023 ruled 6-3 against his plan to erase up to $20,000 in debt for millions of borrowers. 

At the same time, Americans are holding more than $1.7 trillion in student loans, a debt load that has impaired their ability to save or buy a home, among other issues.

“For far too long, our student loan system has made it too difficult for borrowers experiencing hardships, often financial hardships, to access relief,” Education Department Miguel Cardona said on a call with reporters. “It’s not fair, it’s not right and it’s not who we are as Americans.”

How people would get relief

Under the proposal, there would be two ways borrowers could qualify for the debt relief. Some people with student loans could receive forgiveness without an application, with the Education Secretary providing one-time relief to borrowers whom the agency determines have an 80% chance of being in default within two years, Cardona said.

“A big reason why we’re fighting for student debt relief is to address the more than 1 million defaults we see annually in the student loan system,” he said.

The second pathway for loan relief would provide forgiveness after borrowers fill out an application, with the department assessing 17 factors such as the applicant’s overall debt balance, household income, and whether their student loan payments are keeping them from affording basics like housing or health care. 

“Financing a college education is supposed to help students climb the economic ladder, not leave them buried in a ditch,” Cardona said.