The Justice Department, in the Reagan administration's first major indication of merger policy, yesterday announced that it is prepared to block G. Heileman Brewing Co. Inc.'s. proposed $494 million acquisition of the Jos. Schlitz Brewing Co.

Assistant Attorney General for Antitrust William Baxter said the government would sue to block the merger if the two companies moved forward with the deal. The merger of the two Wisconsin breweries awaits approval of their stockholders.

Baxter in a brief press release said he had informed the two firms' managements that the combination might substantially reduce competition in the manufacture and sale of beer in violation of the Clayton Antitrust Act.

Schlitz is the industry's fourth largest company, and Heileman is the sixth largest brewer. Each is responsible for about 8 percent of total shipments in an industry in which the four largest companies control two-thirds of all beer shipments.

If the two companies merged they would become the nation's third largest brewer. Schlitz' total sales were about $896 million last year and Heileman's were $840 million. Neither would comment yesterday on the Justice Department announcement.

The case is the government's first public indication that it would apply existing guidelines to current mergers, although the antitrust division successfully forced agreement by Conoco Inc. to divest a joint chemical venture with Monsanto Co.

Baxter has pledged to revamp the Justice Department's 13-year-old merger guidelines, although until that project is finished, possibly as soon as this winter, the old standards would apply. In essence, those guidelines suggest that in highly concentrated industries a merger involving two firms with market shares of 5 percent or more could be challenged.

In another development, the Justice Department announced it is reviewing six consent decrees between the government and eight major motion picture companies.

The action is part of a program announced earlier by Baxter and designed to review the more than 1,200 outstanding judgments now under the aegis of the division and federal courts.

The decrees involve Paramount Pictures Inc., Loew's Inc., Twentieth Century-Fox Corp., RKO General Inc., Columbia Pictures Corp., Universal Corp., United Artists Corp., and Warner Brothers.