Company counters commission’s allegations, addresses concerns
By Janet Weyandt, YSN
Tempur Sealy International’s (TSI’s) proposed $4 billion purchase of Mattress Firm has stalled.
The Federal Trade Commission (FTC) issued an administrative complaint and authorized a lawsuit in federal court to block the acquisition, alleging that Tempur Sealy — the world’s largest mattress supplier and manufacturer — will have the ability and incentive to suppress competition and raise prices for mattresses for millions of consumers once it acquires the retail chain.
The proposed vertical acquisition would merge TSI’s manufacturing and supply operations with Mattress Firm’s vast retail footprint, giving the combined company enormous power at multiple parts of the bedding supply chain.
Industry Impact
In its written release, the FTC alleges that deal documents show TSI’s plans to limit rivals’ access to Mattress Firm’s nationwide network of stores, potentially creating a domino effect that would hamper American mattress manufacturers’ ability to compete and causing business closures and layoffs — potentially of thousands of workers.
“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,” said Henry Liu, director of the FTC’s Bureau of Competition. “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.”
In its written response, TSI pushed back against the allegations.
“Tempur Sealy has been working constructively with the FTC to secure regulatory approval for this transaction and is disappointed that the FTC has initiated litigation,” the manufacturer said in a statement posted to its website. “We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers.
“We manufacture 100 percent of the mattresses we sell domestically in the United States, supporting the domestic workforce with thousands of jobs. We have discussed the transaction with the labor unions representing our employees and none have expressed opposition to the transaction. In fact, most of the unions have submitted letters of support, believing that the transaction will benefit their members and not adversely impact workers of other bedding companies that they represent.”
Read more: Tempur Sealy Firms Up Mattress Firm Buy
Once TSI acquires Mattress Firm, the FTC alleges that the combined business could foreclose its rivals in a multitude of ways. For example, the expanded company could limit present and future rivals’ access to Mattress Firm’s floor space, award sales associates higher commissions on Tempur Sealy products or otherwise take steps designed to steer customers away from competitors’ products and toward Tempur Sealy’s mattresses.
By significantly impairing rivals’ ability to compete, the acquisition could force rival suppliers to shut their manufacturing plant operations across the country, from Georgia, North Carolina, Ohio and Wisconsin to Arizona, Colorado and Utah, the FTC’s complaint alleges.
Remedies Rendered
In its statement, TSI indicated it is willing to address the issues raised in the complaint by closing stores and maintaining a multitude of brands.
“We are and have been open to appropriate commitments to address FTC concerns,” the company said. “Consistent with our operation of the multiple bedding retailers we have acquired in Europe, Mattress Firm will remain a multi-branded retailer, and we have already engaged with numerous Mattress Firm suppliers on post-merger supply agreements and have executed several agreements. In keeping with our multi-brand strategy, we have also offered a guaranteed slot commitment for third-party manufacturers at Mattress Firm stores. Lastly, we have been open to a divestiture of stores and supporting infrastructure.
“We are confident in the pro-competitive rationale for this transaction and look forward to presenting the many benefits of the combination. We believe that a successful litigation process can be completed in the coming months, which would allow us to close the transaction in late 2024 or early 2025.”
The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the Southern District of Texas to halt the transaction, pending an administrative proceeding.
