Tempur Sealy is not happy with the FTC’s 5-0 vote to block its acquisition of Mattress Firm and shot back at the organization with heated remarks in a 31-page administrative complaint.
There were many things said, and I’d like to go through and opine about important parts of the complaint.
- Tempur Sealy said the FTC didn’t claim that the vertical merger would diminish horizontal competition or affect the majority of mattress manufacturers or retailers. The complaint claims the merger will have no impact on competition for the lower-priced mattresses that most consumers purchase.
“So, what, then, is the complaint about?” Tempur asks in its reply. “Rather than show harm to competition, the complaint alleges potential harm to the tiny handful of mattress manufacturers who use Mattress Firm. In truth, that handful is just Serta Simmons — the only mattress manufacturer other than Tempur Sealy who uses Mattress Firm as a nationwide retail outlet.”
Judging by how much of the 45-page FTC complaint was blacked out, it’s hard to argue that Tempur isn’t going after competition in an unhealthy way. And going off of the rest of the document, there are clear examples that Tempur’s intentions are more aggressive than they give off publicly. It specifically went after SSB, so who would blame them for opposing this deal?
It also reads to me that Tempur is portraying SSB as the only mattress manufacturer against this deal, which could imply that the FTC is siding with “SSB over Tempur.” From those I’ve spoken with, SSB is not alone, and I’m not sure if they’re the only two companies that use Mattress Firm for nationwide reach. - Tempur claims that the FTC’s complaint narrowly targets the market of “so-called premium mattresses,” which the commission has described as “a category that sits above entry-level mattresses and is largely made up of mattresses other than the most expensive ones.”
I’ll concede that the FTC may be off about the definition of a premium mattress. The three typical price tiers — entry-level, midprice and premium — are still used by many in the industry, though there is no agreed-upon standard for what the price points include.
However, despite the FTC getting the definition wrong, I do think Tempur would come in and fill the midprice-point category. With their marketing power, this could easily take business from independent retailers who might rely on premium models.
I once took a college course about how to write opinion pieces — ironic, I know — and one of the most important lessons I learned is that you can’t force the definition of a word. They are often too differently defined by people that it’s best to stay away from them. In this case, I think the idea still gets through despite the true definition being wrong. - “Any assessment of actual competition in the mattress industry would thoroughly discredit the complaint,” Tempur Sealy said. It also said the FTC doesn’t understand the nuances of the mattress industry.
I’d love to know what those nuances are. When you combine the world’s largest mattress manufacturer and the world’s largest mattress retailer, there is a clear advantage. Tempur argues that the acquisition is pro-competition, but other than saying that and backing it up with “it will help American consumers” they haven’t given examples of how it will promote competition in the mattress industry.
This may not be the last time we hear from Tempur as we wait for the court proceedings. That could take until the end of the year or longer.
