IN THE UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION
Civil Action No.:
COMPLAINT FOR PRELIMINARY INJUNCTION PURSUANT TO SECTION 13(b) OF THE FEDERAL TRADE COMMISSION ACT
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), by its designated attorneys, petitions the Court, pursuant to Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), for a preliminary injunction enjoining defendant H.J. Heinz Co. ("Heinz"), including its domestic and foreign agents, divisions, subsidiaries, affiliates, partnerships, or joint ventures, from acquiring through a merger or otherwise any stock, assets, or other interest, either directly or indirectly, of Milnot Holding Corporation, the parent company of Beech-Nut Nutrition Corp. ("Beech-Nut"); thereby maintaining the status quo during the pendency of an administrative proceeding, challenging defendants' proposed combination, that will be commenced by the Commission pursuant to Section 5 of the FTC Act, 15 U.S.C. § 45, and Sections 7 and 11 of the Clayton Act, 15 U.S.C. §§ 18 and 21.
JURISDICTION AND VENUE
1. Jurisdiction is based on Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and 28 U.S.C. §§ 1337 and 1345. Venue is proper under Section 13(b) of the FTC Act; 28 U.S.C. § 1391(b) and (c); and Section 12 of the Clayton Act, 15 U.S.C. § 22.
2. The Commission is an administrative agency of the United States Government established, organized, and existing pursuant to the FTC Act, 15 U.S.C. § 41 et seq., with its principal offices at 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Commission is vested with authority and responsibility for enforcing, inter alia, Section 5 of the FTC Act and Section 7 of the Clayton Act.
3. Defendant Heinz is a for-profit corporation existing under the laws of the State of Pennsylvania, with its principal place of business in Pittsburgh, Pennsylvania. Heinz is one of the largest food products manufacturers in the United States with total revenues exceeding $9 billion. Heinz is the third largest seller of baby food in the United States with total sales in Fiscal Year 2000 exceeding $101 million. Heinz's worldwide baby food sales exceed $1 billion annually.
4. Defendant Milnot Holding Corporation is a for-profit corporation existing under the laws of the State of Delaware, with its principal place of business in St. Louis, Missouri. Beech-Nut is a subsidiary of Milnot and is currently the second largest seller of baby food in the United States with sales exceeding $139 million in Fiscal Year 2000.
5. Heinz and Milnot are engaged in commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton Act, 15 U.S.C. § 12.
6. Heinz and Milnot agree that they are subject to the personal jurisdiction of this Court for purposes of this litigation.
SECTION 13(b) OF THE FTC ACT
7. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), provides in pertinent part:
THE PROPOSED MERGER AND THE COMMISSION'S RESPONSE
8. On or about Feb. 28, 2000, Heinz and Madison Dearborn Capital Partners, the parent of Milnot Holding Corporation and Beech-Nut entered into an agreement whereby Heinz would acquire 100% of the voting securities of Milnot for approximately $185 million.
9. On July 7, 2000, the Commission authorized the commencement of an action under Section 13(b) of the FTC Act to seek a preliminary injunction barring the proposed merger during the pendency of administrative proceedings.
10. The defendants have informed the Commission that they may consummate the proposed merger any time after 11:59 p.m. on Wednesday, July 19, 2000.
11. In authorizing the commencement of this action, the Commission determined that such an injunction is in the public interest and that it has reason to believe that the aforesaid proposed merger would violate Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act because it may substantially lessen competition or tend to create a monopoly in markets for the manufacture and sale of prepared baby food and segments thereof, specifically jarred baby food.
LIKELIHOOD OF SUCCESS ON THE MERITS AND NEED FOR RELIEF
12. The Commission is likely ultimately to succeed in demonstrating, in administrative proceedings to adjudicate the legality of the proposed merger, that the proposed merger would violate Section 7 of the Clayton Act. In particular, the Commission is likely ultimately to succeed in demonstrating, inter alia, that:
13. The reestablishment of Heinz and Beech-Nut as independent viable competitive entities if they were to merge would be difficult, and there is a substantial likelihood that it would be difficult or impossible to restore the businesses as they originally existed. Furthermore, it is likely that substantial interim harm to competition would occur even if suitable divestiture remedies could be devised.
14. For the reasons stated above, the granting of the injunctive relief sought is in the public interest.
WHEREFORE, the Commission requests that the Court:
1. Preliminarily enjoin defendants Heinz and Milnot, and all affiliates of defendants, from taking any further steps to consummate, directly or indirectly, their proposed merger of their businesses, or any other acquisition of stock, assets, or other interest, either directly or indirectly;
2. Maintain the status quo pending the issuance of an administrative complaint by the Commission challenging such acquisition, and until such complaint is dismissed by the Commission or set aside by a court on review, or until the order of the Commission made thereon has become final; and
3. Award such other and further relief as the Court may determine to be proper and just, including costs.
Dated: July 14, 2000