The Federal Trade Commission (FTC) voted to block the proposed merger of mattress maker Tempur Sealy and retail chain Mattress Firm.
Regulators said the $4 billion deal, announced in May 2023, would suppress competition and lead to higher prices for consumers.
Henry Liu, director of the FTC’s Bureau of Competition, said: “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.
“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.”
The merger would combine Tempur Sealy, which owns brands such as Stearns & Foster and Tempur-Pedic, with Mattress Firm, the nation’s largest mattress retailer.
“Tempur Sealy has made it abundantly clear that its acquisition of Mattress Firm is intended to kneecap competitors and dominate the market”
Regulators are concerned this vertical acquisition would give Tempur Sealy significant power across multiple parts of the mattress supply chain.
They said it could cut off access to the largest retail chain for other mattress suppliers.
The FTC also warned the reduced output could lead to layoffs of thousands of US workers and the closure of factories.
Tempur Sealy said the bedding industry is “highly competitive,” and consumers have various options in terms of brands, price points, and purchasing channels.
The company said: “Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year.
“We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers.
“Mattress Firm’s strong retail presence complements Tempur Sealy’s manufacturing capabilities, facilitating more targeted innovation, improving the customer experience.”
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The FTC said the acquisition could “result in higher mattress prices, decreased product quality and choice, or reduced innovation.”
The agency also alleges that Tempur Sealy would use its influence to steer customers away from competitors’ products and toward its own by manipulating floor space and sales associate commissions in Mattress Firm stores.
Tempur Sealy aims to finalize the transaction by late 2024 or early 2025.
It said labor unions representing their employees have not opposed the merger and that it has guaranteed contracts with other brands and manufacturers.
This move by the FTC is part of the Biden administration’s broader effort to crack down on megamergers.
Earlier this year, federal regulators sued to block the merger of supermarket giants Kroger and Albertsons and challenged the fusion of fashion conglomerates Tapestry and Capri Holdings.
