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.

The Federal Trade Commission filed a suit in April seeking to block the intended deal, arguing it would curb competition in the so-called accessible luxury market.

The government’s court victory threatens the deal, which was set to put Michael Kors, Coach and Kate Spade under the same corporate umbrella.