Tempur Sealy’s Mattress Firm acquisition faces a major hurdle at the U.S. Federal Trade Commission, where all five commissioners voted to block the deal. The unanimous decision means the FTC will challenge the $4 billion mattress industry merger in court.

On June 2, following the FTC’s announcement, Tempur Sealy responded in a public statement. It objected to the decision as it prepares for the government’s lawsuit to proceed in the U.S. District Court for the Southern District of Texas.

Tempur Sealy ecommerce sales by year

Tempur Sealy is No. 156 in Digital Commerce 360’s Top 1000. The database includes a ranking of North America’s leading retailers by online sales. Mattress Firm is No. 274. Digital Commerce 360 sorts both companies in the Housewares & Home Furnishings category. Additionally, Digital Commerce 360 projects total ecommerce sales for Tempur Sealy in 2024 will be $5.52 billion.

Why the FTC is challenging Tempur Sealy’s Mattress Firm acquisition

“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, in the FTC’s announcement. “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 the FTC’s official complaint, regulators called Mattress Firm “the single most important retail channel for mattress brands.” They also claimed that it “can drive massive volumes of sales through its unmatched consumer reach. They added that “mattress brands jostle to access its floor space.” In that context, the commissioners believe that permitting Tempur Sealy to merge with Mattress Firm “would upend this competitive dynamic, giving Tempur Sealy enormous sway over the fate of its rivals.”

Moreover, the filing also cites “Tempur Sealy’s history of using exclusionary deals to block rivals.” In addition, the FTC asserted that “this acquisition would further cement its dominance and deprive independent brands of the opportunity to engage in free and fair competition.”

“Because this proposed acquisition may substantially lessen competition or tend to create a monopoly, it should be enjoined,” the complaint states.

Tempur Sealy’s defense of the merger

In defense of its proposed deal, Tempur Sealy disputed the FTC’s assessment.

“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,” a statement from the company read. “We appreciate their efforts to understand the industry and the proposed transaction, but ultimately believe the FTC’s perspective does not reflect all the relevant facts and law.”

Offering its own view of the bedding industry, it painted a very different picture of the merger’s implications.

“The bedding industry is highly competitive, offering consumers a diverse selection of products, brands, price points, and purchasing channels,” Tempur Sealy stated. “There are thousands of brick-and-mortar storefronts across the United States where consumers can purchase bedding products, only a small fraction of which are operated by Mattress Firm. Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year.”

Ultimately the mattress brand stands by its intention to complete the deal. It concluded by expressing that confidence to shareholders in its release.

“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,” Tempur Sealy said.

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