FTC votes to block merger of Tempur Sealy and Mattress Firm
2024-07-02T18:44:54.526Z(Mike Blake/Reuters)The Federal Trade Commission voted Tuesday to block mattress maker Tempur Sealy from buying retail chain Mattress Firm, a merger that regulators said would suppress competition and lead to higher prices.“Through emails, presentations, and other deal documents, Tempur Sealy has made it abundantly clear that its acquisition of Mattress Firm is intended to kneecap competitors and dominate the market,” Henry Liu, director of the FTC’s Bureau of Competition, said in a news release. “This deal isn’t about creating efficiencies; it’s about crippling the competition, which would raise prices on an essential good and could lead to layoffs for good paying American manufacturing jobs in nearly a dozen states.”The $4 billion merger, announced in May 2023, would combine the mattress manufacturer, which owns brands Stearns & Foster and Tempur-Pedic, with the nation’s largest mattress retailer. Regulators said that vertical acquisition would give the company “enormous power at multiple parts of the mattress supply chain” and potentially cut off access to the biggest retail chain for other mattress suppliers.In addition, reduced output could lead to layoffs of thousands of workers, most of whom are employed in the U.S., and close down factories, the FTC warned.In a statement, Tempur Sealy countered that the bedding industry is “highly competitive” and that there are many options for consumers when it comes to brands, price points, purchasing channels and brick-and-mortar storefronts. “Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year,” the company said.“We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers,” it added. “Mattress Firm’s strong retail presence complements Tempur Sealy’s manufacturing capabilities, facilitating more targeted innovation, improving the customer experience.”The FTC alleges the acquisition could “result in higher mattress prices, decreased product quality and choice, or reduced innovation.” It would also undercut rivals in Mattress Firm store locations by limiting available floor space, awarding sales associates higher commissions for selling Tempur Sealy products, and other steps that would “steer customers away from competitors’ products and toward Tempur Sealy’s mattresses,” it said.Tempur Sealy, which hopes to close the transaction in late 2024 or early 2025, said labor unions representing their employees have not opposed the merger. The company also said it has already guaranteed contracts with other brands and manufacturers.The FTC’s vote is the latest effort by the Biden administration to crack down on megamergers, including in the retail industry. In February, federal regulators filed suit to block the merger of supermarket giants Kroger and Albertsons, which regulators said would eliminate competition and threaten consumers’ access to affordable groceries. The FTC also went after the fusion of fashion conglomerates Tapestry and Capri Holdings.
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The Federal Trade Commission voted Tuesday to block mattress maker Tempur Sealy from buying retail chain Mattress Firm, a merger that regulators said would suppress competition and lead to higher prices.
“Through emails, presentations, and other deal documents, Tempur Sealy has made it abundantly clear that its acquisition of Mattress Firm is intended to kneecap competitors and dominate the market,” Henry Liu, director of the FTC’s Bureau of Competition, said in a news release. “This deal isn’t about creating efficiencies; it’s about crippling the competition, which would raise prices on an essential good and could lead to layoffs for good paying American manufacturing jobs in nearly a dozen states.”
The $4 billion merger, announced in May 2023, would combine the mattress manufacturer, which owns brands Stearns & Foster and Tempur-Pedic, with the nation’s largest mattress retailer. Regulators said that vertical acquisition would give the company “enormous power at multiple parts of the mattress supply chain” and potentially cut off access to the biggest retail chain for other mattress suppliers.
In addition, reduced output could lead to layoffs of thousands of workers, most of whom are employed in the U.S., and close down factories, the FTC warned.
In a statement, Tempur Sealy countered that the bedding industry is “highly competitive” and that there are many options for consumers when it comes to brands, price points, purchasing channels and brick-and-mortar storefronts. “Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year,” the company said.
“We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers,” it added. “Mattress Firm’s strong retail presence complements Tempur Sealy’s manufacturing capabilities, facilitating more targeted innovation, improving the customer experience.”
The FTC alleges the acquisition could “result in higher mattress prices, decreased product quality and choice, or reduced innovation.” It would also undercut rivals in Mattress Firm store locations by limiting available floor space, awarding sales associates higher commissions for selling Tempur Sealy products, and other steps that would “steer customers away from competitors’ products and toward Tempur Sealy’s mattresses,” it said.
Tempur Sealy, which hopes to close the transaction in late 2024 or early 2025, said labor unions representing their employees have not opposed the merger. The company also said it has already guaranteed contracts with other brands and manufacturers.
The FTC’s vote is the latest effort by the Biden administration to crack down on megamergers, including in the retail industry. In February, federal regulators filed suit to block the merger of supermarket giants Kroger and Albertsons, which regulators said would eliminate competition and threaten consumers’ access to affordable groceries. The FTC also went after the fusion of fashion conglomerates Tapestry and Capri Holdings.
