FTC v. H.J. Heinz Co. - 345 U.S. App. D.C. 364, 246 F.3d 708 (2001)

Rule:

Section 13(b) of the Federal Trade Commission Act provides for the grant of a preliminary injunction where such action would be in the public interest - as determined by a weighing of the equities and a consideration of the Commission's likelihood of success on the merits. 15 U.S.C.S. § 53(b).

Facts:

Appellees, H.J. Heinz Company (Heinz) and Milnot Holding Corporation (Beech-Nut), two baby food manufacturers, entered into a merger agreement. Appellant Federal Trade Commission (FTC) sought a preliminary injunction pursuant to section 13(b) of the Federal Trade Commission Act, 15 U.S.C.S. § 53(b), to enjoin the merger. The injunction was sought in aid of an FTC proceeding instituted to challenge the merger as violative of, inter alia, section 7 of the Clayton Act, 15 U.S.C.S. § 18. The district court denied the preliminary injunction and the FTC appealed.

Issue:

Was preliminary injunctive relief warranted under the circumstances?

Answer:

Yes.

Conclusion:

The court of appeals noted that Section 13(b) of the Federal Trade Commission Act provided for the grant of a preliminary injunction where such action would be in the public interest - as determined by a weighing of the equities and a consideration of the Commission's likelihood of success on the merits. 15 U.S.C.S. § 53(b). To determine likelihood of success on the merits under 15 U.S.C.S. § 53(b), courts would measure the probability that, after an administrative hearing on the merits, the Federal Trade Commission will succeed in proving that the effect of the merger may be substantially to lessen competition, or to tend to create a monopoly in violation of section 7 of the Clayton Act. In this case, the court noted that, in accepting the manufacturers' argument that they did not compete, the district court failed to address the record evidence - that the two did in fact price against each other, and that, where both were present in the same areas, they depressed each other's prices as well as those of their sole competitor even though they were virtually never all found in the same store. Accordingly, where the FTC raised serious and substantial questions, the appellate court concluded that the public equities weighed in favor of preliminary injunctive relief. As such, the court reversed the district court and remanded for entry of a preliminary injunction against the appellees.