Tempur Sealy’s approved Mattress Firm acquisition is a blow for antitrust enforcement

The news: A federal judge in Texas cleared Tempur Sealy’s $4 billion acquisition of Mattress Firm to proceed—a potential blow to the Federal Trade Commission (FTC)’s antitrust authority.

The FTC has until February 7 to file an appeal with the Fifth Circuit Court of Appeals.

Bipartisan support: All five FTC commissioners voted in July to block the deal on the grounds that acquiring the US’ largest mattress retailer could let Tempur Sealy stifle competition and raise prices.

• Tempur Sealy could direct Mattress Firm to limit or even eliminate space allocated to competitors within the premium mattress space, the FTC’s suit alleged, and deny brands access to valuable customer insights and product development assistance.
• That would make life significantly harder for rivals like Serta Simmons and Purple, which are already struggling with weak demand due to the difficult housing market.

Our take: The judge’s decision to allow the acquisition could mark the beginning of a more permissive environment for mergers under the Trump administration. Where former FTC chair Lina Khan moved aggressively to scuttle deals—such as Tapestry’s proposed acquisition of Capri—her successor, Andrew Ferguson, believes that “most mergers benefit Americans” and promote innovation.

At the same time, his support for the suit against Tempur Sealy indicates companies shouldn’t expect the FTC to turn a blind eye to all M&A activity, particularly in cases where there’s clear evidence that a merger could harm competition and restrict innovation.