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Osem accused Heinz of having only 21 percent tomato concentrate in its ketchup instead of the 61 percent it claims in advertising.
The Health Ministry, which requires foods labeled "ketchup" to contain at least 41 percent concentrate, sided with Osem and ordered Heinz to relabel its product "tomato seasoning."
A spokesman for Diplomat, the Israeli distributor for Heinz, earlier defended the ketchup against Osem's claims.
"Obviously, Osem, which has a monopoly, would be happy if it were only possible to sell their product in Israel," the spokesman told Ynet in January. "But Osem's claims have no substance."
Diplomat is reportedly appealing to the Health Ministry to reconsider the ruling.