A federal judge blocked the planned $8.5 billion acquisition by Tapestry Inc., maker of Coach and Kate Spade handbags, of rival Capri Holdings Ltd., sending Capri shares down as much as 56% in postmarket trading.

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.