Kraft was the third largest ready-to-eat cereal producer in the United States. Kraft acquired Nabisco’s ready-to-eat cereal assets for approximately 405 million dollars. This acquisition reduced the number of serious players in the ready-to-eat cereal market from six to five. The New York Attorney General’s Office brought suit alleging that the acquisition eliminated competition between Kraft and Nabisco and significantly reduced competition in the ready-to-eat cereal market. New York sought to have the acquisition declared unlawful. In the interim, New York State sought to bar Kraft from altering the trade dress of the Nabisco brands. The motion asked the court to order Kraft to sell the acquired cereals under the Nabisco trade dress pending the outcome of the trial. That motion was denied on the grounds that the state failed to show that irreparable harm would result from test-marketing of slightly altered trade dress.
Two motions for a preliminary injunction were denied. Ultimately, the claim was dismissed after a bench trial when the judge held the evidence insufficient to show that the acquisition would substantially diminish competition. The case was noteworthy for being one of the few at the time in which a court appointed its own expert to assist the court.