A green light from the European Commission on the proposed $1 billion merger of Chiquita Brands International Inc. and Fyffes Plc. moves the two firms a step closer to becoming the top banana company on the planet, but some investors have asked a federal court to intervene.

A shareholder vote is set for Oct. 24, according to a timetable approved by the European Commission. Boards of both Chiquita and Fyffes have already approved the merger. The High Court of Ireland also must approve the deal.

Whether approval from the European Commission will effect Chiquita’s talks with two companies in Brazil was not mentioned in an Oct. 3 news release about the European action. Chiquita officials announced Sept. 8 that Fyffes had agreed to allow the discussions with juice maker Cutrale Group and investment firm Safra Group.

Some Chiquita shareholders — the City of Birmingham (Ala.) Firemen’s and Policemen’s Supplemental Pension System — says the offer from the Brazilian companies is a better deal and that Chiquita’s executives and board of directors should be stopped from closing the deal with Fyffes.

Chiquita is standing firm.

“Chiquita’s board of directors has always acted solely in what it believes to be the best interest of the company and its shareholders,” Ed Loyd, director of corporate communications and responsibility, said Oct. 9. “Accordingly, Chiquita believes this lawsuit is without merit and intends to defend itself vigorously.”

The pension fund filed its case Oct. 7 in federal court in New Jersey, where Chiquita is incorporated. The case contends Chiquita officials and board members breached their fiduciary duty to shareholders. The lawsuit states Fyffes will only pay $10 per share while the Brazilians offered $13 per share on Aug. 11.

“Instead of entertaining the higher, competing bid, the Chiquita board instead set up diminished and rushed negotiations and erected defensive measures designed to thwart any higher offer,” according to the pension fund complaint.

“It did this because Chiquita executives and members of the board were assured continued employment and a future role in the newly merged entity, ChiquitaFyffes, that was not assured with the higher, competing offer.”

After the interest from Brazil, Dublin-based Fyffes sweetened its offer, revising the merger agreement so that Chiquita shareholders would own a greater share of the new company. Originally the Chiquita shareholders would have gotten 50.7% but Fyffes increased that to 59.6%, according to a Sept. 26 news release. The pension fund challenge contends Fyffes new offer would amount to $11.89 per share.

The court challenge also states Chiquita’s officials took action to penalize shareholders if they vote against the Fyffes deal. Chiquita signed an agreement with Fyffes on Sept. 25 that more than triples the penalty the American company would have to pay if the deal falls through.

“(In the) agreement, executed on Sept. 25, this amount was increased to 3.5% — approximately $6.6 million — of the total value attributable to Chiquita’s issued share capital,” the pension fund case states.

The lawsuit also questions the ability of Chiquita’s management to successfully integrate acquired operations, citing its purchase of Fresh Express from Performance Food Group in 2005. The suit states Chiquita has had to effectively devalue the Fresh Express operation on its balance sheet.

“Chiquita paid $855 million for the business, but recently announced $555 million in impairment charges relating to the acquisition,” the lawsuit states.