UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES
In the Matter of
Tempur Sealy International, Inc.
and
Mattress Firm Group Inc.
Docket No. 9433
Public Version
RESPONDENT TEMPUR SEALY INTERNATIONAL’S
ANSWER AND DEFENSES
Pursuant to Rule 3.12, Respondent Tempur Sealy International hereby
answers the Commission’s Complaint.
Introduction
Tempur Sealy, a mattress manufacturer, proposes acquiring Mattress Firm, a
mattress retailer. Like most vertical mergers, the proposed transaction is
procompetitive. It will enhance competition, increase innovation, and reduce costs—
all to the benefit of American consumers.
The Complaint raises no concerns about any loss of horizontal, head-to-head
competition. It does not claim that this merger will affect the vast majority of
mattress retailers, of whom there are thousands (not even counting Amazon or other
internet sellers). Nor does it allege that the merger will have any impact on the vast
majority of mattress manufacturers, most of whom sell little or nothing through
Mattress Firm. And the Complaint concedes that this transaction will have no effect
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on competition for the vast majority of mattress sales—i.e., the less expensive, “non-
premium” mattresses that most Americans buy.
So, what, then, is the Complaint about? 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. The Complaint then gets even narrower. It claims that the
affected “market” is limited to a small and ill-defined slice of the mattress industry:
“premium” mattresses, which apparently are expensive mattresses that most
customers do not buy. But the Complaint’s claims about even this twice-narrowed
sliver of mattress competition are at odds with reality.
First, the FTC’s case rests on the idea that the proposed transaction will cut
off access to a critical mattress retailer. Yet, the Complaint provides no information
about Mattress Firm’s share of any mattress retail market, let alone of the FTC’s
vague “premium” mattress category. Instead, the Complaint musters only an ad hoc
estimate that of mattress shoppers “visit” Mattress Firm—not that they buy any
mattresses, “premium” or otherwise, from Mattress Firm. Indeed, only a fraction of
those who “visit” a store will purchase a mattress there, and customers often visit
many retailers before making a purchase.
Given the thousands of mattress retailers, the prevalence of online sales, and
the many “premium” brands that rely mostly on their own retail operations, it is not
surprising that the Complaint fails to allege anything about market share or the
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amount of foreclosure. Mattress suppliers can sell to mattress-specialty retailers (like
Texas Mattress Makers, Mancini’s Sleepworld, or Mattress Warehouse), to furniture
stores (like Ashley, Gallery Furniture, or American Furniture Warehouse), to online
markets (like Amazon), to department stores (like Macy’s), to big-box stores (like Wal-
Mart or Big Lots), to warehouse stores (like Costco), and many more.
Mattress suppliers can also sell directly to customers. For example, as the
Complaint concedes, Sleep Number, the third-largest mattress manufacturer in the
US and the second largest “premium” mattress manufacturer, sells its mattresses
only through its own stores. And many other manufacturers have followed Sleep
Number’s playbook, including Avocado, Saatva, Helix, and Brooklyn Bedding.
Against that economic reality, the Complaint’s heavy reliance on alleged statements
that Mattress Firm is a falls short. For example, Purple achieved
success long before it was sold in Mattress Firm,
and still is only in about half of Mattress Firm stores.
Second, documents, public statements, witness testimony, and Tempur Sealy’s
past retailer acquisitions all show that Tempur Sealy has neither the incentive nor
the plan to abandon Mattress Firm’s successful multi-brand strategy. Tempur Sealy’s
internal transaction analyses assumed that Mattress Firm would remain a multi-
brand retailer, which is consistent with Tempur Sealy’s public statements to
investors and post-merger supply agreements. Moreover, once vertically integrated,
most of the combined company’s sales will come from the retail side of the business.
Tempur Sealy thus has no incentive to upend the strategy that has made Mattress
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Firm successful. Further, through more than a dozen investigational hearings,
witnesses consistently testified that Tempur Sealy would not remove or disadvantage
other mattress suppliers from Mattress Firm. And when Tempur Sealy has bought
other successful multi-brand mattress retailers, it has kept them multi-branded. For
these reasons, the Complaint’s dependence on Tempur Sealy’s vigorous prior
competition with its horizontal rivals is misplaced. Vigorous horizontal competition
is not only not illegal, it is the very thing antitrust law seeks to protect. And it is not
predictive of how a vertically integrated firm will act.
Third, the Complaint ignores the fact that Tempur Sealy has guaranteed the
very distribution that the Complaint claims it will somehow deny. Tempur Sealy has
committed to reserve mattress “slots” at Mattress Firm for third-party
mattresses It has entered into post-merger supply agreements with
various mattress suppliers, including Purple, and
. And it has committed to divest Mattress
Firm and Sleep Outfitters stores
. If Tempur Sealy’s plan were truly to deny distribution
to rivals like Serta Simmons, it has made it awfully difficult to accomplish that goal.
Fourth, the Complaint is plagued by other key omissions. For example, the
Complaint lacks a cogent product-market definition, which gets no more specific than
somewhere between “entry level” and the “most expensive” mattresses. What price
points are included? Who makes these mattresses? What market shares are
associated with the mattress manufacturers and retailers? The Complaint never says.
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And the reason for these omissions is obvious. Any assessment of actual competition
in the mattress industry would thoroughly discredit the Complaint.
In sum, considering the factual and economic realities of the proposed
transaction, the Commission is not entitled to any relief.
Response to the Complaint’s Specific Allegations
All allegations not expressly admitted herein are denied. Further, any
allegation relying on the terms “premium mattress” or “premium mattress market”
are denied on the ground that those terms are vague and intertwined with legal
conclusions. Tempur Sealy does not interpret headings or subheadings in the
Complaint as well-pleaded allegations to which any response is required. To the
extent such a response is required, they are denied. Tempur Sealy reserves the right
to amend and/or supplement this Answer.
Each paragraph below corresponds to the same-numbered paragraph in the
Complaint:
1. As to the first sentence, Tempur Sealy admits that it believes it is the
world’s largest bedding provider. As to the second sentence, Tempur Sealy lacks
knowledge or information sufficient to form a belief as to the truth of the allegations
regarding Mattress Firm’s size; Tempur Sealy otherwise denies the allegations of the
second sentence. As to the third sentence, Tempur Sealy admits that Mattress Firm
advertises that it has over 2,300 locations; Tempur Sealy otherwise lacks knowledge
or information sufficient to form a belief as to the truth of the allegations. Tempur
Sealy lacks knowledge or information sufficient to form a belief as to the truth of the
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quote in the fourth sentence and otherwise denies the allegations of the fourth
sentence.
2. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in the first sentence. As to the second sentence,
Tempur Sealy admits that at one time Mattress Firm made that estimate, but
Tempur Sealy otherwise denies the allegations.
3. Tempur Sealy admits that Mattress Firm offers a wide range of
mattresses but lacks knowledge or information sufficient to form a belief as to the
truth of the remaining allegations in the first sentence. Tempur Sealy denies the
allegations in the second sentence. Tempur Sealy lacks knowledge or information
sufficient to form a belief as to the truth of the allegations in the third sentence.
Tempur Sealy denies the allegations in the fourth and fifth sentences. The sixth
sentence’s use of “significant” and “premium” is vague, therefore Tempur Sealy denies
those allegations on that ground. The sixth sentence purports to quote a document,
and Tempur Sealy respectfully refers the Court to that document for a full and
accurate view of its content; Tempur Sealy further denies the characterization of that
document as misleading. As to the seventh sentence, the use of “premium” is vague,
and Tempur Sealy denies the allegations. Tempur Sealy denies the allegations in the
eighth sentence. Tempur Sealy lacks knowledge or information sufficient to form a
belief as to the truth of the allegations of the ninth sentence; further, the use of
“premium” is vague and Tempur Sealy denies the allegations on that ground.
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4. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second sentence. Tempur Sealy admits that its overall revenue has
grown since 2019 but otherwise denies the allegations in the third sentence. Tempur
Sealy denies the allegations in the fourth sentence.
5. Tempur Sealy denies the allegations in the first and second sentences.
The third sentence and the following graphic purport to quote and show a document,
and Tempur Sealy respectfully refers the Court to that document for a full and
accurate view of its content. Tempur Sealy further responds that the allegations in
the third sentence are misleading and take the document out of context. The fourth
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content.
6. Tempur Sealy denies the allegations in the first, second, and third
sentences. The fourth and fifth sentences purport to quote documents, and Tempur
Sealy respectfully refers the Court to those documents for a full and accurate view of
their content.
7. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second sentence. Tempur Sealy denies the allegations in the third
sentence. Tempur Sealy lacks knowledge or information sufficient to form a belief as
to the truth of the allegations in the fourth sentence. Further, the fourth sentence
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purports to quote documents, and Tempur Sealy respectfully refers the Court to those
documents for a full and accurate view of its content.
8. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
admits that, as a horizontal competitor, Tempur Sealy has competed vigorously for
floor space with other brands at Mattress Firm but otherwise denies the allegations
in the second sentence.
Tempur Sealy admits that
Mattress Firm still carries mattresses but otherwise denies the allegations in
the fifth sentence.
9. Denied.
10. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content.
11. Denied.
12. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second sentence; further, the use of the term “premium” is vague
and Tempur Sealy denies the allegations on that ground. Tempur Sealy denies the
allegations in the third sentence. The fourth sentence purports to characterize
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contracts, and Tempur Sealy respectfully refers the Court to those contracts for a full
and accurate view of their content. Tempur Sealy denies the allegations in the fifth
sentence.
13. Denied.
14. Denied.
15. Denied.
16. Paragraph 16 contains a legal conclusion that requires no response.
17. Paragraph 17 contains a legal conclusion that requires no response.
18. Tempur Sealy admits the allegations in the first sentence. As to the
second sentence, Tempur Sealy admits that Tempur-Pedic International and Sealy
Corp. merged in 2013 and that Tempur Sealy believes it is the largest bedding
supplier in the world. Tempur Sealy admits the allegations in the third sentence.
Tempur Sealy admits that it had approximately $4.9 billion in sales in 2023, of which
approximately $3.8 billion were in North America; it otherwise denies the allegations
in the fourth sentence. Tempur Sealy admits that it sells mattresses under the Sealy,
Tempur-Pedic, and Stearns & Foster brands and that it believes Sealy and Tempur-
Pedic are, respectively, the number-one and number-two US brands by sales revenue;
it otherwise lacks the knowledge and information sufficient to form a view as to the
truth of the allegations in the fifth sentence. As to the allegations in the sixth
sentence, Tempur Sealy admits that it owns approximately 99 Tempur-Pedic stores
and approximately 109 Sleep Outfitters stores. As to the allegations in the seventh
sentence, Tempur Sealy admits that in 2023 it generated approximately $3.7 billion
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via the wholesale channel and approximately $1.1 billion via the direct channel.
Tempur Sealy admits that it has conducted acquisitions; otherwise, the allegations
in the eighth sentence are vague and Tempur Sealy denies them on that ground. As
to the ninth sentence, Tempur Sealy admits that it has acquired Sherwood Bedding
and Sleep Outfitters, as well as Dreams and SOVA, two retailers that remained
multi-brand post-acquisition. The graphic following the ninth sentence purports to
reflect a document, and Tempur Sealy respectfully refers the Court to that document
for a full and accurate view of its content.
19. Tempur Sealy admits that it understands the allegations in the first
sentence to be true. Tempur Sealy lacks knowledge or information sufficient to form
a belief as to the truth of the allegations in the second sentence. Tempur Sealy admits
that it understands the allegations in the third sentence to be true. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the fourth sentence or the graphic following the fourth sentence.
20. Admitted.
21. Tempur Sealy admits the allegations in the first sentence. Tempur Sealy
admits that it owns and operates mattress factories but otherwise lacks knowledge
or information sufficient to form a belief as to the truth of the allegations in the second
and third sentences.
22. Tempur Sealy admits the allegations in the first sentence. Tempur Sealy
admits that mattresses can be classified as innerspring, foam, hybrid, and gel but
otherwise lacks knowledge or information sufficient to form a belief as to the truth of
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the allegations in the second sentence. As to the third sentence, Tempur Sealy admits
that quality can vary between mattresses but otherwise denies the allegations.
Tempur Sealy admits the allegations in the fourth sentence.
23. Tempur Sealy denies the allegations in the first and second sentences.
As to the third, fourth, and fifth sentences, the term “premium” is vague and Tempur
Sealy denies the allegations on that ground; further, Tempur Sealy lacks knowledge
or information sufficient to form a belief as to the truth of the allegations.
24. Tempur Sealy denies the allegations in the first sentence. As to the
second sentence, Tempur Sealy admits that customers can have varying mattress
preferences but otherwise denies the allegations. As to the third sentence, Tempur
Sealy admits that mattress purchases can be expensive and infrequent but otherwise
denies the allegations. As to the fourth sentence, Tempur Sealy admits that such an
estimate existed in 2021, but it has made other estimates at other times; otherwise
Tempur Sealy lacks knowledge or information sufficient to form a belief as to the
truth of the allegations.
25. Tempur Sealy admits that sales associates can be helpful for customers
shopping either online or in brick-and-mortar stores but otherwise denies the
allegations in the first and second sentences. The third sentence purports to quote a
document, and Tempur Sealy respectfully refers the Court to that document for a full
and accurate view of its content.
26. Tempur Sealy denies the allegations in the first sentence. As to the
second sentence, the term “premium” is vague and Tempur Sealy denies the
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allegations on that ground; otherwise, Tempur Sealy lacks knowledge or information
sufficient to form a belief as to the truth of the allegations. As to the third sentence,
Tempur Sealy admits that customers can and do buy mattresses online but otherwise
denies the allegations. Tempur Sealy lacks knowledge or information sufficient to
form a belief as to the truth of the allegations in the fourth sentence. Tempur Sealy
denies the allegations in the fifth sentence.
27. Tempur Sealy denies the allegations in the first sentence. As to the
second sentence, Tempur Sealy admits that it understands Casper, Purple, Resident
Home, and Tuft & Needle all have offered a bed in a box; otherwise Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in the third, fourth, fifth, and sixth sentences.
28. Tempur Sealy admits the allegations in the first sentence are
tautologically true. In the second sentence, “significant” is vague and Tempur Sealy
denies its allegations on that ground. Tempur Sealy admits the allegations in the
third sentence. Tempur Sealy lacks knowledge or information sufficient to form a
belief as to the truth of the allegations in the fourth sentence. As to the fifth sentence,
Tempur Sealy admits that mattress suppliers often compete for slots by offering
financial incentives, which can include employing strategies intended to maintain
high retailer margins.
29. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in the first sentence. Tempur Sealy admits the
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allegations in the second sentence. As to the third sentence, Tempur Sealy admits
that a co-op payment may be structured as described. The fourth sentence is not a
factual allegation and requires no response.
30. Tempur Sealy admits the allegations in the first sentence. The second
and third sentences purport to characterize a contract, and Tempur Sealy respectfully
refers the Court to that contract for a full and accurate view of its content.
31. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in the first sentence. As to the second sentence,
Tempur Sealy admits that mattress suppliers may offer exclusive products to
retailers but otherwise denies the allegations or lacks knowledge or information
sufficient to form a view of the truth of the allegations. The third sentence purports
to quote a document, and Tempur Sealy respectfully refers the Court to that
document for a full and accurate view of its content. As to the fourth and fifth
sentences, Tempur Sealy admits that mattress suppliers may use a Minimum
Advertised Price, which typically sets a price floor, and/or a Unilateral Pricing Policy,
which sets a specific price; Tempur Sealy otherwise denies the allegations. As to the
sixth sentence, Tempur Sealy admits that it has a Unilateral Pricing Policy for
Tempur-Pedic and Stearns & Foster mattresses; otherwise, the use of “premium” is
vague and Tempur Sealy denies the allegations on that ground; Tempur Sealy lacks
knowledge or information sufficient to form a belief as to the truth of the remaining
allegations in the sixth sentence. As to the seventh sentence, Tempur Sealy admits
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that it sometimes attempts to identify departures from its pricing policies but
otherwise denies the allegations.
32. Tempur Sealy denies the allegations in the first and second sentences.
As to the third sentence, Tempur Sealy admits that Casper, Purple, and others have
successfully entered as mattress suppliers, but otherwise Tempur Sealy lacks
knowledge or information sufficient to form a belief as to the truth of the allegations.
The fourth sentence purports to reflect a quote from a document, and Tempur Sealy
respectfully refers the Court to that document for a full and accurate view of its
content.
33. The first sentence purports to quote from a document, and Tempur Sealy
respectfully refers the Court to that document for a full and accurate view of its
content. As to the second sentence, the term “premium” is vague, and Tempur Sealy
denies the allegations on that ground. Tempur Sealy lacks knowledge or information
sufficient to form a belief as to the truth of the allegations in the third sentence. As
to the fourth sentence, Tempur Sealy admits that Sealy mattresses can have different
materials and that product names can be exclusive to certain retailers; otherwise,
Tempur Sealy lacks knowledge or information sufficient to form a belief as to the
truth of the allegations. As to the fifth sentence, Tempur Sealy admits that Tempur-
Pedic mattresses are made with a proprietary memory foam; it otherwise denies the
allegations as “premium” is vague, and Tempur Sealy lacks knowledge or information
sufficient to form a belief as to the truth of the allegations regarding sales revenue.
As to the sixth sentence, Tempur Sealy admits that it makes Stearns & Foster
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mattresses but otherwise denies the allegations. Tempur Sealy admits the allegations
in the seventh sentence.
34. As to the first sentence, the term “crown jewel” is vague, and Tempur
Sealy denies the allegations on that ground. As to the second sentence, Tempur Sealy
admits that Tempur-Pedic mattresses are made with a proprietary memory foam and
that it has advertised that Tempur-Pedic is the most highly recommended bed in
America; otherwise, Tempur Sealy lacks knowledge or information sufficient to form
a belief as to the truth of the allegations; further, where the second sentence appears
to quote from a document, Tempur Sealy respectfully refers the Court to that
document for a full and accurate view of its content. Tempur Sealy lacks knowledge
or information sufficient to form a belief as to the truth of the allegations in the third
sentence.
35. As to the first sentence, Tempur Sealy admits that it competes with
Serta Simmons; otherwise, the terms “main” and “next-largest” are vague and
Tempur Sealy denies the allegations on those grounds. As to the second sentence,
Tempur Sealy admits that it understands Serta Simmons to own Beautyrest, Serta,
and Tuft & Needle mattresses; otherwise, Tempur Sealy lacks knowledge or
information sufficient to form a belief as to the truth of the allegations. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the third, fourth, and fifth sentences. As to the sixth sentence, Tempur
Sealy admits that it understands Serta Simmons underwent Chapter 11 bankruptcy;
otherwise, Tempur Sealy lacks knowledge or information sufficient to form a belief
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as to the truth of the allegations. As to the seventh sentence, to the extent it purports
to quote a document, Tempur Sealy respectfully refers the Court to that document for
a full and accurate view of its content, and Tempur Sealy otherwise denies its
allegations.
36. As to the first sentence, Tempur Sealy admits that it competes with
Sleep Number; but otherwise Tempur Sealy lacks knowledge or information sufficient
to form a belief as to the truth of the allegations. Tempur Sealy admits the allegations
in the second sentence. As to the third, fourth, and fifth sentences, Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations.
37. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in Paragraph 37.
38. Tempur Sealy admits the allegations in the first sentence. Tempur Sealy
denies the allegations in the second sentence.
39. Tempur Sealy denies the allegations in the first sentence. As to the
second sentence, Tempur Sealy admits that Tempur-Pedic is a successful mattress
brand; further, the term “must-have brand” is vague, and Tempur Sealy denies the
allegations on that ground; further, Tempur Sealy lacks knowledge or information
sufficient to form a belief as to the truth of the allegations. The third sentence
purports to quote a document, Tempur Sealy respectfully refers the Court to that
document for a full and accurate view of its content; further, Tempur Sealy denies
the characterization as misleading. Tempur Sealy denies the allegations of the fourth
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and fifth sentences. As to the sixth sentence, Tempur Sealy admits that it had an
initiative, encouraging retailers to carry a broader
array of Tempur Sealy products but Tempur Sealy otherwise denies the allegations.
As to the seventh sentence, Tempur Sealy lacks knowledge or information sufficient
to form a belief as to the truth of the allegations.
40. Tempur Sealy denies the allegations in the first sentence. As to the
second sentence, Tempur Sealy admits that it classifies some retailers as “TSI-only,”
meaning they only sell Tempur Sealy mattresses, and some retailers as “TSI-
dominant,”
but Tempur Sealy otherwise denies the allegations. Tempur Sealy lacks knowledge
or information sufficient to form a belief as to the truth of the allegations in the third
sentence.
41. As to the first and second sentences, Tempur Sealy admits that some of
its contracts with mattress retailers require the retailer not to sell certain mattresses;
Tempur Sealy otherwise denies the allegations. The third sentence purports to
characterize a contract, and Tempur Sealy respectfully refers the Court to that
contract for a full and accurate view of its content.
42. Tempur Sealy denies the allegations in the first sentence. The second
sentence and following graphic purport to characterize and reflect a document, and
Tempur Sealy respectfully refers the Court to that document for a full and accurate
view of its content. As to the third sentence, Tempur Sealy admits that its stock price
reached an all-time high earlier this year.
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43. Tempur Sealy denies the allegations in the first, second, and third
sentences. As to the fourth sentence, Tempur Sealy admits that, as a horizontal
competitor, , but
Tempur Sealy otherwise denies the allegations.
44. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in Paragraph 44.
45. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second sentence. The third sentence purports to quote a document,
Tempur Sealy respectfully refers the Court to that document for a full and accurate
view of its content. As to the fourth sentence, Tempur Sealy lacks knowledge or
information sufficient to form a belief as to the truth of the allegations. As to the fifth
sentence, the term “premium” is vague, and Tempur Sealy denies the allegations on
that ground.
46. As to the first sentence, the term “premium” is vague, and Tempur Sealy
denies the allegations on that ground. As to the second sentence, Tempur Sealy
admits that, in 2022, approximately of its wholesale revenue was through
Mattress Firm; Tempur Sealy otherwise denies the allegations. Tempur Sealy lacks
knowledge or information sufficient to form a belief as to the truth of the allegations
of the third sentence. Tempur Sealy denies the allegations of the fourth sentence.
47. Denied.
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48. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
admits the allegations in the second sentence. Tempur Sealy denies the allegations
in the third, fourth, fifth, and sixth sentences. As to the seventh sentence, Tempur
Sealy admits that its total net sales in North America was approximately $2.5 billion
in 2019 and approximately $4 billion in 2021.
49. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, Tempur Sealy respectfully refers the Court
to that document for a full and accurate view of its content.
50. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in Paragraph 50.
51. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content. As to the third
sentence, to the extent it purports to quote a document, Tempur Sealy respectfully
refers the Court to that document for a full and accurate view of its content, and
Tempur Sealy otherwise denies the allegations.
52. As to the first sentence,
but Tempur Sealy otherwise denies the allegations. Tempur
Sealy lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second sentence.
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53. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content; Tempur Sealy also
denies this characterization as misleading.
54. Denied.
55. Tempur Sealy denies the allegations in the first sentence. The second
and third sentences characterize documents, and Tempur Sealy respectfully refers
the Court to those documents for a full and accurate view of their content.
56. As to the first sentence, “sought to displace” is vague, and Tempur Sealy
denies the allegations on that ground. Tempur Sealy admits the allegations in the
second sentences. The third and fourth sentences quote documents, and Tempur
Sealy respectfully refers the Court to those documents for a full and accurate view of
their content. Tempur Sealy admits the allegations in the fifth sentence.
57. As to the first and second sentences, Tempur Sealy admits that it
understands that, in 2020, Tempur Sealy
otherwise denies the allegations. Tempur Sealy lacks knowledge or information
sufficient to form a belief as to the truth of the allegations in the third sentence. The
fourth sentence purports to characterize a contract, and Tempur Sealy respectfully
refers the Court to that contract for a full and accurate view of its content.
58.
; Tempur Sealy otherwise
denies the allegations in Paragraph 58. To the extent Paragraph 58 purports to quote
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documents, Tempur Sealy respectfully refers the Court to those documents for a full
and accurate view of their content.
60. The first sentence is a legal conclusion to which no response is needed;
to the extent a response is needed, Tempur Sealy admits that the Commission has
the burden of establishing relevant product and geographic markets. Tempur Sealy
denies the allegations in the second sentence.
61. Denied.
62. Denied.
63. Denied.
64. Tempur Sealy denies the allegations in the first, second, and third
sentences. As to the fourth sentence, the term “premium” is vague, and Tempur Sealy
denies the allegations on that ground; otherwise, the sentence purports to quote
documents, and Tempur Sealy respectfully refers the Court to those documents for a
full and accurate view of their content; Tempur Sealy also denies the characterization
of the documents as misleading. The fifth sentence purports to quote documents, and
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Tempur Sealy respectfully refers the Court to those documents for a full and accurate
view of their content.
65. Denied.
66. Tempur Sealy denies the allegations in the first sentence. As to the
second sentence, Tempur Sealy admits that it has sometimes referred to a particular
price band as “premium,” but otherwise denies the allegations. The third, fourth, fifth,
and sixth sentences purport to quote documents, and Tempur Sealy respectfully
refers the Court to those documents for a full and accurate view of their content.
Further, as to the allegations in the sixth sentence not purporting to quote a
document, Tempur Sealy denies the allegations. As to the seventh sentence, Tempur
Sealy admits that it is aware that Mattress Firm sometimes refers to mattresses by
price band, but otherwise, Tempur Sealy lacks knowledge or information sufficient to
form a belief as to the truth of the allegations.
67. As to the first sentence, Tempur Sealy admits that mattress retailers
can provide the ability to test mattresses and sometimes employ salespeople who can
be helpful; Tempur Sealy otherwise denies the allegations. Tempur Sealy denies the
allegations in the second and third sentences.
68. The allegations in Paragraph 68 are legal conclusions to which no
response is needed. To the extent a response is needed, the term “premium” is vague,
and Tempur Sealy denies the allegations on that basis. Further, Tempur Sealy denies
that mattresses imported into the United States can be excluded from the relevant
geographic market.
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69. Denied.
70. Denied.
71. Denied.
72. Tempur Sealy denies the allegations in the first sentence. The second
and third sentences and the following graphic purport to quote and reflect documents,
and Tempur Sealy respectfully refers the Court to those documents for a full and
accurate view of their content; Tempur Sealy also denies the characterization as
misleading.
73. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to characterize and quote a document, and Tempur Sealy
respectfully refers the Court to that document for a full and accurate view of its
content. As to the third sentence, Tempur Sealy admits that, at times,
Tempur Sealy otherwise denies the allegations. The fourth and fifth sentences
purport to quote documents, and Tempur Sealy respectfully refers the Court to those
documents for a full and accurate view of their content. Tempur Sealy denies the
allegations in the sixth sentence.
74. Denied.
75. Tempur Sealy denies the allegations in the first and second sentences.
The third sentence purports to quote a document, and Tempur Sealy respectfully
refers the Court to that document for a full and accurate view of its content. Tempur
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Sealy denies the allegations in the fourth sentence. The fifth and sixth sentences
purport to characterize and quote documents, and Tempur Sealy respectfully refers
the Court to those documents for a full and accurate view of their content.
76. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content; further, Tempur
Sealy denies the allegations as a mischaracterization of the document.
77. Denied.
78. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in Paragraph 78.
79. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in the first sentence. As to the second and third
sentences,
; but Tempur Sealy denies that Mattress
Firm has otherwise, Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second and third sentences. As to the fourth sentence, Tempur
Sealy lacks knowledge or information sufficient to form a belief as to the truth of the
allegations.
80. Denied.
81. Tempur Sealy denies the allegations in the first sentence. As to the
second and third sentences, Tempur Sealy lacks knowledge or information sufficient
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to form a belief as to the truth of the allegations. The fourth sentence purports to
characterize a document, and Tempur Sealy respectfully refers the Court to that
document for a full and accurate view of its content. Tempur Sealy denies the
allegations in the fifth sentence.
82. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations in the second sentence.
83. Tempur Sealy denies the allegations in the first sentence. The second
and third sentences and the bullets that follow purport to characterize contracts, and
Tempur Sealy respectfully refers the Court to those contracts for a full and accurate
view of their content.
84. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content. Tempur Sealy
denies the allegations in the third sentence.
85. Denied.
86. Tempur Sealy denies the allegations in the first, second, third, and
fourth sentences. As to the fifth sentence, Tempur Sealy lacks knowledge or
information sufficient to form a belief as to the truth of the allegations. Tempur Sealy
denies the allegations in the sixth sentence. As to the seventh sentence, Tempur Sealy
lacks knowledge or information sufficient to form a belief as to the truth of the
allegations.
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87. Denied.
88. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
admits the allegations in the second, third, and fourth sentences. Tempur Sealy
denies the allegations in the fifth sentence. As to the sixth sentence, to the extent it
purports to quote a document, Tempur Sealy respectfully refers the Court to that
document for a full and accurate view of its content; further, Tempur Sealy responds
that, at other times, it made other recapture estimates. Tempur Sealy denies the
allegations in the seventh sentence.
89. Tempur Sealy denies the allegations in the first, second, third, and
fourth sentences. As to the fifth sentence, the term “significant” is vague, and Tempur
Sealy denies the allegations on that ground; further, the fifth sentence purports to
characterize a contract, and Tempur Sealy respectfully refers the Court to that
contract for a full and accurate view of its content. Tempur Sealy denies the
allegations in the sixth sentence.
90. Denied.
91. Denied.
92. As to the first sentence, “major battleground” is vague, and Tempur
Sealy denies the allegations on that ground. Tempur Sealy admits the allegations in
the second sentence. The third sentence purports to quote a document, and Tempur
Sealy respectfully refers the Court to that document for a full and accurate view of
its content; further, Tempur Sealy denies the characterization as misleading. As to
the fourth sentence, Tempur Sealy admits that Mattress Firm sells Purple
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mattresses but otherwise denies the allegations. As to the fifth sentence, Tempur
Sealy admits that it developed a strategy called to compete
with Purple but otherwise denies the allegations.
93. Tempur Sealy admits that it created a crushable grid/wafer mattress
Tempur Sealy
otherwise denies the allegations in Paragraph 93.
94. Denied.
95. Tempur Sealy denies the allegations in the first sentence. As to the
second and third sentences, Tempur Sealy admits that the proposed transaction will
result in the elimination of double marginalization; otherwise, Tempur Sealy lacks
knowledge or information sufficient to form a belief as to the truth of the allegations.
Tempur Sealy denies the allegations in the fourth sentence.
96. Paragraph 96 purports to quote documents, and Tempur Sealy
respectfully refers the Court to those documents for a full and accurate view of their
content.
97. Tempur Sealy admits that it made the quoted statement but
simultaneously reaffirmed that
Tempur Sealy otherwise denies the allegations in Paragraph
97.
98. Tempur Sealy denies the allegations in the first and second sentences.
The third sentence purports to characterize a document, and Tempur Sealy
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respectfully refers the Court to that document for a full and accurate view of its
content.
99. Paragraph 99 purports to quote and reflect various documents, and
Tempur Sealy respectfully refers the Court to those documents for a full and accurate
view of their content.
100. Tempur Sealy denies the allegations in the first sentence. Tempur Sealy
admits the allegations in the second sentence. The third sentence purports to quote
a document, and Tempur Sealy respectfully refers the Court to that document for a
full and accurate view of its content. As to the fourth sentence, Tempur Sealy admits
that, prior to the acquisition, Sleep Outfitters offered a small, mattress
brand called Symbol, and it no longer does.
101. Paragraph 101 contains a legal argument to which no response is
required. To the extent a response is required, Tempur Sealy denies the allegations.
102. Denied.
103. Denied.
104. Denied.
105. Tempur Sealy denies the allegations in the first sentence. As to the
second and third sentences, Tempur Sealy lacks knowledge or information sufficient
to form a belief as to the truth of the allegations. As to the fourth sentence, Tempur
Sealy admits that companies can and do vertically integrate, but Tempur Sealy
otherwise denies the allegations. As to the fifth sentence, Tempur Sealy admits that
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it acquired Sleep Outfitters in 2019, but Tempur Sealy otherwise denies the
allegations. Tempur Sealy admits the allegations in the sixth sentence.
106. Tempur Sealy denies the allegations in the first sentence. The second
sentence purports to quote a document, and Tempur Sealy respectfully refers the
Court to that document for a full and accurate view of its content. As to the third
sentence, Tempur Sealy lacks knowledge or information sufficient to form a belief as
to the truth of the allegations. Tempur Sealy denies the allegations in the fourth and
fifth sentences.
107. The Complaint omits Paragraph 107.
108. The Complaint omits Paragraph 108.
109. The Complaint omits Paragraph 109.
110. The Complaint omits Paragraph 110.
111. Denied.
112. Denied.
113. Denied.
114. Denied.
115. Tempur Sealy lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in Paragraph 115.
116. Denied.
117. Denied.
118. As to the first sentence, Tempur Sealy admits that it has made several
commitments that resolve any possible competition concerns; Tempur Sealy
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otherwise denies the allegations. Tempur Sealy denies the allegations in the second
sentence.
119. Tempur Sealy admits the allegations in the first sentence. The second
sentence characterizes contracts, and Tempur Sealy respectfully refers the Court to
those contracts for a full and accurate view of their content. Tempur Sealy denies the
allegations in the third sentence.
120. Tempur Sealy incorporates by reference its responses to Paragraphs 1
through 119.
121. Denied.
Defenses
1. The Complaint fails to state a claim upon which relief can be granted, including
because:
A. The Complaint fails to allege a valid product market, including because
the Complaint lacks a cogent definition of “premium” mattresses.
B. The Complaint fails to allege a valid geographic market, including
because the Complaint apparently fails to account for imported
mattresses sold in the United States.
C. The Complaint fails to allege that the proposed transaction will
plausibly harm consumers or competition, including because the
Complaint fails to plausibly allege that Respondents exercise market
power, fails to identify Mattress Firm’s market share, fails to account
for alternative means of distribution, fails to account for Respondents’
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voluntary commitments, and fails to account for the fact that new entry
and expansion by competitors can be timely, likely, and sufficient.
2. This case must be dismissed because the Commission’s exercise of rulemaking,
prosecutorial, and adjudicative powers violates the separation-of-powers
doctrine and Article III.
3. This case must be dismissed because these administrative proceedings are
unconstitutionally insulated from Presidential oversight in violation of the
separation-of-powers doctrine and Article II.
4. This case must be dismissed because these administrative proceedings violate
the Fifth Amendment’s Due Process Clause.
Notice of Contemplated Relief
Tempur Sealy requests that the Commission:
A. Dismiss the Complaint with prejudice;
B. Deny the Commission’s requested relief;
C. Award to Tempur Sealy the costs incurred in defending this action,
including expert’s fees and reasonable attorney’s fees;
D. Any and all further relief as the Commission may deem just and proper.
Dated: July 9, 2024
Respectfully submitted,
/s/ D. Bruce Hoffman
D. Bruce Hoffman
Ryan A. Shores
Daniel P. Culley
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Matthew I. Bachrack
Blair W. Matthews
Jacob M. Coate
Gabriel J. Lazarus
CLEARY GOTTLIEB STEEN & HAMILTON
LLP
2112 Pennsylvania Ave., NW
Washington, D.C. 20037
202-974-1500
bhoffma[email protected]
rshores@cgsh.com
dculley@cgsh.com
mbachrack@cgsh.com
jcoate@cgsh.com
glazarus@cgsh.com
Heather S. Nyong’o
CLEARY GOTTLIEB STEEN & HAMILTON
LLP
650 California St.
San Francisco, CA 94108
415-796-4400
Lina Bensman
CLEARY GOTTLIEB STEEN & HAMILTON
LLP
One Liberty Plaza
New York, NY 10006
212-225-2000
Counsel for Tempur Sealy International,
Inc.
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Certificate of Service
I hereby certify that, on July 9, 2024, I caused the foregoing to be electronically
filed with the Secretary of the Commission using the Federal Trade Commission’s e-
filing system, causing the document to be served on the following registered
participants.
April J. Tabor
Secretary of the Federal Trade Commission
Federal Trade Commission
600 Pennsylvania Ave., NW, Rm. H-113
Washington, D.C. 20580
ElectronicFilings@ftc.gov
Office of Administrative Law Judges
Federal Trade Commission
600 Pennsylvania Ave., NW,
Washington, D.C. 20580
I also certify that I caused an unredacted copy of the foregoing document to be
served via email to:
Allyson Maltas, [email protected]
Noel Miller, nmiller2@ftc.gov
Stephen Rodger, srodg[email protected]ov
Ethan Stevenson, [email protected]
Adam Pergament, apergament@ftc.gov
Jeanette Pascale, jpascale@ftc.gov
Isiah Albright, ialbright@ftc.gov
Devon Allen, dallen1@ftc.gov
Counsel Supporting the Complaint
Sara Razi, sara.razi@stblaw.com
Lindsey Bohl,
lindsey.bohl@stblaw.com
Preston Miller,
preston.miller@stblaw.com
Counsel for Mattress Firm Group,
Inc.
/s/ D. Bruce Hoffman
D. Bruce Hoffman
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Certificate for Electronic Filing
I hereby certify that the electronic copy sent to the Secretary of the Commission
is a true and correct copy of the paper original and that I possess a paper original of
the signed document that is available for review by the parties and the adjudicator.
July 9, 2024
/s/ D. Bruce Hoffman
D. Bruce Hoffman
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