HOUSTON— Tempur Sealy International and Mattress Firm have submitted an updated plan, which guarantees the sleep retailer will keep its current percentage of “premium” mattresses from other manufacturers for five years, in response to a judge’s suggestion that its slot commitment for third-party vendors was lower than anticipated.
According to the document, which was filed in the U.S. Court for the Southern District of Texas, Judge Charles Eskridge stated in closing arguments in mid-December that Tempur Sealy’s commitment to premium mattress slots from other mattress manufacturers after the proposed acquisition closed was less than what Mattress Firm currently has.
Tempur Sealy and Mattress Firm stated in their court filing that they will allow third-party mattresses to occupy at least 43% of premium spaces (on average) in all of the Mattress Firm stores that are now open in order to address the perceived disparity. It had previously been agreed to set aside 28% of the floor for other mattress vendors.
Mattresses that price for $1,500 or more are considered luxury mattresses, according to the business. The commitment to the slot is “consistent with Tempur Sealy’s plan and incentive to keep Mattress firm multi-branded,” according to the filing.
In July, the Federal Trade Commission sued Tempur Sealy and Mattress Firm to prevent the mattress manufacturer from acquiring the sleep retailer for $4 billion. According to the FTC, the agreement would hurt consumers by raising costs and impeding competition.
The firms claimed that the FTC had not demonstrated that the merger would reduce competition in a “properly defined relevant market,” even though Tempur Sealy and Mattress Firm had recently committed to the five-year slot strategy as stated in the filing.
In their filing, Tempur Sealy stated, “Defendants are committed to resolving this Court’s concerns so that the merger, which will benefit both competition and consumers, may proceed.” Mattress Firm and Tempur Sealy stated that they did not think more promises were required to enable the purchase to move forward and that the FTC had “failed at every step to meet its burden.”
The current slots held by third-party premium suppliers do not have to be preserved by the commitments made by Mattress Firm and Temper Sealy, nor are they necessary to make this merger procompetitive. Defendants, however, are promising the court that they would do precisely that.
The average 43%, according to the petition, is around the same percentage that Mattress Firm presently has in its stores for other mattresses that cost $1,500 or more.
In the dispute involving the FTC and Tempur Sealy, the judge has not yet rendered a decision.
