FTC to Sue to Block Tempur Sealy's Acquisition of Mattress Firm

July 3, 2024: The Federal Trade Commission (FTC) announced its intention to file a lawsuit to impede Tempur Sealy International Inc.’s proposed $4 billion acquisition of Mattress Firm. The regulatory body expressed concerns that the merger would stifle competition within the mattress industry, potentially leading to negative consequences for consumers.

The FTC’s decision to pursue legal action follows a unanimous vote by its commissioners. The Commission contends that the combined entity would possess a dominant market share, empowering it to unduly influence pricing and product availability for mattress consumers nationwide. Internal communications obtained by the FTC, including emails and presentations, were cited as evidence suggesting Tempur Sealy’s strategic intent to leverage the acquisition to marginalize competitors and solidify its market leadership.

“The FTC’s investigation revealed a clear intention on the part of Tempur Sealy to utilize the acquisition of Mattress Firm to suppress competition within the mattress industry,” declared Henry Liu, Director of the FTC’s Bureau of Competition. “The Commission is resolute in its commitment to safeguarding a fair and competitive marketplace for the benefit of American consumers.”

Mattress Firm, boasting over 2,300 retail locations across the United States, is recognized as one of the nation’s leading mattress retailers. Tempur Sealy, a prominent mattress manufacturer, announced the acquisition agreement in May 2023. The proposed deal, structured as a combination of cash and stock, would have established a mattress industry behemoth with a global presence exceeding 3,000 stores.

The FTC’s lawsuit seeks to impede the merger’s finalization. The legal proceedings are anticipated to take several months to conclude. Should the FTC prevail in court, the acquisition would be definitively blocked. Conversely, a ruling in favor of Tempur Sealy would pave the way for the deal’s completion, potentially by late 2024 or early 2025, as originally envisioned.

This development signifies the FTC’s unwavering commitment to upholding competitive practices within the American marketplace. The ramifications of the lawsuit extend beyond the mattress industry, serving as a cautionary tale for corporations contemplating mergers that have the potential to stifle competition and disadvantage consumers.

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