STORY: Michael Kors might not be getting a new owner after all.
Parent firm Capri is the subject of an $8.5 billion takeover bid by Coach parent firm Tapestry.
But now the U.S. Federal Trade Commission is suing to stop the deal.
It says the takeover would eliminate competition between the companies, which both play in the more affordable "accessible luxury" end of the market.
It also says a deal could result in wage cuts and other penalties for workers at the firms.
Industry experts say it's unusual for the FTC to intervene in a luxury sector deal, and could set a precedent for future moves.
Tapestry says regulators have misunderstood the market, and the way consumers now shop.
Some experts agreed, saying the U.S. luxury market was highly fragmented and fiercely competitive, and wouldn't be threatened by the deal.
It all comes after competition enforcers issued new merger guidelines in December.
They stipulate that harm to pay or working conditions can be grounds to object to a takeover.
Tapestry says it needs the deal to build a bigger firm that can compete with European giants like Louis Vuitton-owner LVMH.
The takeover has already been approved by watchdogs in the EU and Japan.
