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The Federal Trade Commission asked a federal appeals court Monday for an emergency injunction to block H.J. Heinz Co.’s acquisition of Beech-Nut Nutrition Corp. Without the stay, Heinz will be free to combine the companies, shutter plants and take other steps that would make it impractical for the government to reverse the transaction if it is later found to be illegal, the FTC said. “Only by granting the requested relief can this court maintain the status quo and assure that its review is meaningful,” the FTC said. A federal judge last Wednesday rejected the FTC’s request for an injunction blocking the deal, saying the economic efficiencies of allowing the second- and third-leading baby food makers to combine outweigh the loss of competition from the deal. It was one of the rare times a judge ruled in favor of an efficiency defense in a merger case. At the request of the judge, the companies agreed not to close the $185 million, all-cash deal until after the U.S. Court of Appeals for the District of Columbia decides whether it will stay the deal so it may hear the case. The FTC asked for an expedited hearing of the appeal, noting that other courts have required briefs to be filed just days after accepting such a case and held oral arguments in just over two weeks. “Such a schedule would impose only a marginal delay upon defendants, yet would give this court a chance to decide the substantive legal issues posed by the district court’s decision,” the FTC said. The agency argued that the trial court ignored controlling case law, which dictates an injunction should be granted when the government shows that a highly concentrated market will become even more concentrated and that high entry barriers make it unlikely new firms will emerge. The judge also erred in requiring the FTC to show that the merger of two of the only three baby food makers would cause harm on the retail level, the agency said. Finally, the FTC said the judge misapplied the efficiency defense, which holds that some anti-competitive deals may be acceptable if the cost savings are high enough. The judge should have required the companies to prove that the efficiencies would bring economic benefits to purchasers of baby food and that the deal would result in a more competitive market, the agency said. Copyright (c)2000 TDD, LLC. All rights reserved.

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