UPDATE 1-U.S. challenges J.M. Smucker's purchase of ConagraGÇÖs Wesson oil brand

brand@ (Adds details on complaint, Conagra says it disagrees)

WASHINGTON, March 5 (Reuters) - The U.S. Federal Trade Commission said on Monday it filed an administrative complaint charging that J.M. Smucker Co's proposed purchase of Conagra Brands Inc's Wesson cooking oil brand would likely lessen competition and violate anti-trust law.

Smucker owns the Crisco brand. If it acquired the Wesson brand, it would control at least 70 percent of the market for branded canola and vegetable oils sold to grocery stores and other retailers, the FTC said in a statement.

"The complaint alleges that the acquisition is likely to increase Smucker's negotiating leverage against retailers, especially traditional grocers, by eliminating the vigorous head-to-head competition that exists between the Crisco and Wesson brands today," the statement said.

Conagra said it opposed the FTC decision and was working with J.M. Smucker to review "all of our options."

"After working diligently for the last eight months to respond to the FTC's inquiries about the transaction, we are very disappointed by and disagree with the commission's decision," Conagra said in a statement.

J.M. Smucker did not immediately comment. Conagra announced plans to sell the Wesson brand for about $285 million in May 2017.

Conagra, the maker of Chef Boyardee pasta and Orville Redenbachers popcorn, sold its loss-making private-label business in 2016 to TreeHouse Foods Inc and spun off its Lamb Weston frozen potato business.

J.M. Smucker had said it expected the deal to add about $230 million to its annual net sales.

The FTC said retailers and ultimately consumers "would likely face higher prices for branded canola and vegetable cooking oil" if the deal was approved.

The FTC said the deal was struck after attempted price increases by each brand over the past two years that were limited by intense competition from the two rivals.

The FTC said Smuckers internal documents acknowledged that eliminating price competition between Crisco and Wesson was a central part of its rationale for the acquisition.

An administrative trial is scheduled to begin in August, the FTC said. (Reporting by David Shepardson; Additional reporting by Eric Beech; Editing by Tim Ahmann and Peter Cooney)