The Federal Trade Commission made a significant decision to block the $4 billion merger between mattress giants Tempur Sealy and Mattress Firm. The world’s largest mattress supplier, Tempur Sealy, had planned to acquire the largest bedding retailer in the United States in a deal that was expected to reshape the industry.
The FTC unanimously voted to prevent the acquisition, citing concerns about competition suppression and potential price increases for consumers. By combining forces, the two companies would have gained substantial power in the mattress supply chain, impacting thousands of American workers employed by competing mattress suppliers.
Henry Liu, Director of the FTC’s Bureau of Competition, expressed that the acquisition was not about efficiency but rather about stifling competition to dominate the market. The deal, if allowed, could lead to higher prices for essential goods and potential job losses in manufacturing across multiple states.
The merger would have resulted in a combined entity with 3,000 stores and 71 manufacturing facilities, encompassing popular brands like Tempur-Pedic, Tempur, Sealy, and Stearns and Foster. Analysts initially viewed the deal as mutually beneficial, especially in light of the challenging market conditions faced by the mattress and furniture industry due to the pandemic.
However, the FTC raised concerns about the impact on consumers, particularly working-class individuals and older adults who heavily rely on financing for mattress purchases. The reduced competition could also pose a threat to rival companies like Serta Simmons Bedding and Purple Innovation, Inc., potentially leading to their exit from the market.
The Commission warned about potential anti-competitive practices that could arise from the merger, such as limiting competitors’ access to retail space, incentivizing sales associates to promote Tempur Sealy products, and steering customers away from rival brands.
The decision to block the merger underscores the FTC’s commitment to maintaining a competitive marketplace and protecting consumer interests in the mattress industry.
