A federal judge on Thursday blocked Tapestry Inc.’s planned $8.5 billion acquisition of Capri Holdings, agreeing with regulators that the deal would hurt competition in the handbag industry.

Tapestry, which owns the Coach label, had reached an $8.5 billion deal to acquire Capri, a rival whose lines include Michael Kors. The FTC opposed the deal, saying it would reduce handbag competition and raise prices for consumers.

Tapestry, the parent company of the U.S. fashion brand Coach, failed to acquire Capri Holdings, which has Michael Kors, for $8.5 billion and 11.7 trillion won

A federal judge blocked Tapestry’s acquisition of rival Capri, dealing a blow to their ambitions to create a house of brands that would include Coach, Kate Spade, Michael Kors, Versace and Jimmy Choo.

A federal judge blocked Tapestry's acquisition of Capri on Thursday following a brief trial last month in New York. In her order, Judge Jennifer Rochon granted the Federal Trade Commission's motion for a preliminary injuction to block the proposed merger,