Antitrust in Retail: Rude Awakening for FTC in Tempur Sealy

Antitrust attorney David Kully authored a Law360 article reviewing a case in which the Federal Trade Commission (FTC) challenged a vertical merger in the mattress market. The FTC sought to prevent Tempur Sealy International Inc.'s $4 billion acquisition of Mattress Firm Group Inc., arguing the transaction would harm competition by allowing Tempur Sealy to block or limit access to space within Mattress Firm stores by rival mattress manufacturers. The U.S. District Court for the Southern District of Texas rejected the FTC's arguments, finding the commission did not adequately establish the existence of a premium mattress market for goods priced at more than $2,000 or that Mattress Firm was a critical gatekeeper for mattress distribution. Mr. Kully notes the case resembles the FTC's challenge to Tapestry Inc.'s acquisition of Capri Holdings, which was decided in its favor. He says the reasons behind the differing outcomes – examples of industry recognition and distinct product features to support claims of a relevant market, along with solid evidence of market foreclosure – provide helpful pointers for future cases involving markets defined around price segments and manufacturer-retailer mergers.

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