The Federal Trade Commission (FTC)’s recent effort to halt Tempur Sealy International Inc.’s acquisition of Mattress Firm for $4 billion underscores the heightened scrutiny that vertical mergers are facing. The FTC, which voted unanimously to bring forth a lawsuit against the proposed deal, argues that the combined entity would potentially harm rival mattress brands by stifling competition and elevating prices.
Vertical mergers, involving companies at different levels of the supply chain, have traditionally drawn less attention compared to horizontal mergers. However, this case marks the first time the FTC has challenged a vertical deal since the agency, together with the Department of Justice, updated their merger guidelines in December. This lawsuit will likely serve as a critical point of reference for future evaluations of vertical mergers.
The deal in question involves Tempur Sealy, a prominent mattress manufacturer with brands like Tempur-Pedic and Sealy Posturepedic, seeking to merge with Mattress Firm, a major specialty retailer in the United States with numerous physical stores. The FTC contends that this vertical integration could potentially limit the shelf space available for competing mattress brands, thereby giving Tempur Sealy undue market power over its competitors in the retail landscape.
For more details on the FTC’s lawsuit and its implications for vertical mergers, visit the Bloomberg Law article.