Houston – Tempur Sealy International and Mattress Firm are suing the Federal Trade Commission in federal court in Houston, saying the government agency should not be allowed to adjudicate the proposed acquisition of Mattress Firm though its administrative court.
The action filed today in the U.S. Court in the Southern District of Texas – the same court where the FTC filed its suit to block the proposed $4 billion acquisition – asks the court to rule that the agency not be allowed to challenge the deal through its own administrative proceeding, alleging it violates the companies’ constitutional protections.
The complaint adds another layer to the legal battle as to whether the proposed deal should go through. Earlier this week, Tempur Sealy and Mattress Firm requested a two-month extension in the administrative hearing set for Dec. 4 in Washington D.C.
Currently, the FTC’s case against the merger is scheduled to begin Nov. 12.
In the filing today, Tempur Sealy and Mattress Firm argue that the FTC “flouts the constitutional requirement” that the “judicial power” can only be tried by an Article III court, meaning a federal court established under the U.S. Constitution.
The companies further argue that the FTC’s move to block the acquisition is “voiding a private agreement between (Tempur Sealy and Mattress Firm) for the transfer of property.” The argument, which names the FTC and its five commissioners that voted 5-0 to block the acquisition as defendants, accuses the group’s administrative proceeding process as being inherently biased.
“The FTC brought its challenge to Plaintiffs’ private rights in its own administrative proceeding,” the complaint outlines. “That administrative proceeding starts before an FTC employee (an administrative law judge) and ends with the same five Commissioners who voted to challenge Plaintiffs’ merger in the first place. And it is an administrative proceeding in which, unsurprisingly, the FTC almost always wins. The Constitution requires more; it requires the FTC to bring its merger challenge in an Article III court.”
“The bedding industry is highly competitive, including thousands of brick-and-mortar storefronts and a vast online marketplace,” said Scott Thompson, Tempur Sealy chairman and CEO. “The combination of Tempur Sealy and Mattress Firm will deliver incremental benefits to consumers and opportunities for employees, from enhanced product innovation to an improved customer buying experience and strengthening the entire financial position for the company. We intend to vigorously defend our transaction in the upcoming trial in federal court, which is the proper forum to address this issue.”