Capri Holdings (CPRI), the parent company of Michael Kors and Jimmy Choo, saw shares plunge 46% in after-hours trading on Thursday after a US judge blocked its pending $8.5 billion merger with Coach owner Tapestry (TPR).

In a court filing obtained by Yahoo Finance, US district judge Jennifer Rochon ruled that "antitrust has come into fashion," arguing a merger between the two fashion powerhouses "will substantially lessen competition in the market for accessible-luxury handbags."

Tapestry and Capri had announced their proposed merger last year. The combination would have brought together six high-profile fashion brands under one roof: Tapestry’s Coach, Stuart Weitzman, and Kate Spade with Capri’s Versace, Jimmy Choo, and Michael Kors.

Shares of Tapestry moved in the opposite direction of Capri in the aftermath of the news, rising roughly 12%.

The Federal Trade Commission had moved to block the acquisition in April, seeking a preliminary injunction to stop the deal. That injunction was granted by Rochon on Thursday.

At the time, the agency had argued a merger would "[threaten] 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."

Tapestry fought back against those claims, arguing a merger was necessary in order to compete against dominant European players like Gucci.

Prior to Thursday's ruling, Pauline Brown, former North American chair at LVMH, which owns fashion brands like Louis Vuitton and Dior, told Yahoo Finance the FTC would face a "high hurdle" in making its case.

"The trickiest part of their legal argument is that there is a natural market ... for what they are calling accessibly priced luxury handbags," she said at the time. "The reality is, I think it's a spectrum."

She added it's "a feeble argument" to say consumers will be hurt by higher prices because "the customers, if they're happy, they'll still come at the right price, for the right designs. And if they're not, they're going to go to another player."

The ruling will likely be viewed as a win for the Biden administration, which has aggressively pushed for more competition across a variety of sectors of the economy as consumers face high prices.

Capri and Tapestry did not immediately respond to Yahoo Finance's request for comment.

Yahoo Finance's senior legal reporter Alexis Keenan contributed to this report.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].