Mattress Firm, Houston, operates more than 2,300 brick-and-mortar retail locations and an e-commerce platform. The combined companies would have a total of some 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities and four research and development facilities worldwide.
But the FTC said Tuesday in its release that the acquisition would create “enormous power” at multiple parts of the mattress supply chain. By acquiring Mattress Firm, Tempur Sealy would wield significant power over its rival mattress suppliers, which include Serta Simmons Bedding and Purple Innovation Inc. and could cut or limit their access to Mattress Firm’s stores, the FTC alleged in the complaint.
The deal would also enable Tempur Sealy’s mattress brands — which include Stearns & Foster and Tempur-Pedic — to dominate the market over those of its competitors, the FTC said. By cutting off rivals’ access to Mattress Firm as a retail channel, Tempur Sealy’s acquisition could result in higher mattress prices, decreased product quality and choice, or reduced innovation, FTC said.
The FTC also alleged that the combined firm could also drive other rivals to bankruptcy. For example, it could limit present and future rivals’ access to Mattress Firm’s floor space, award sales workers higher commissions on Tempur Sealy products sold, or otherwise take steps meant to steer customers away from rivals' products and toward Tempur Sealy’s mattresses.
In a statement posted on its corporate website, Tempur Sealy said it was “disappointed” that it initiated litigation and noted it has been working constructively with the FTC to secure regulatory approval for this transaction.
“We ultimately believe the FTC’s perspective does not reflect all the relevant facts and law,” Tempur Sealy said.
The Lexington, Kentucky-based mattress company noted that the bedding industry is highly competitive, offering consumers a diverse selection of products, brands, price points, and purchasing channels. It added that there are thousands of brick-and-mortar storefronts across the U.S. where consumers can purchase bedding products, only a small fraction of which are operated by Mattress Firm.
In addition, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year.
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AP Business Writer Wyatte Grantham-Philips in New York contributed to this report.