Yes, you can.
Create your breaks on both Group1 and Heading 1
Go into the manage breaks dialog and for Group 1 set:
Break header and break footer - unchecked
Duplicate values - Merge
For Heading 1 set:
Break header - checked
break footer - unchecked
Duplicate values - display first
In the break header, right click on your name of group 1 and choose "Clear Contents".
Select your name of level1 and the name of text column next to it and merge them
Replace that cell content with =[Heading 1]
Create a condition format to set the rows where Heading1 is in the small blank cells in your first table to be ="" where Heading 1 is not null
That should get you to where you want