Beech-Nut purchase blocked

Friday, April 27, 2001 | 11:57 a.m.

H.J. Heinz Co.'s proposed $185 million acquisition of rival baby-food maker Beech-Nut was blocked by a U.S. appeals court, citing government concerns the combination would reduce competition.

The Federal Trade Commission argued that the transaction would leave just two U.S. makers of jarred baby food. The FTC had rejected Heinz's claim that acquiring Beech-Nut would allow it to better compete with Novartis AG's Gerber Products Co., which controls almost 70 percent of the U.S. market.

A three-judge appeals panel today overturned a judge's refusal to enjoin the combination while the FTC pressed an administrative challenge to it. The panel of the U.S. Court of Appeals for the District of Columbia Circuit sent the case back to U.S. District Judge James Robertson with orders to issue a preliminary injunction.

"The FTC has raised serious and substantial questions" about the impact on competition, the appeals court said. The government is entitled to a delay while it pursues the case, the judges ruled. "It will be too late to preserve competition if no preliminary injunction has issued."