China has rejected a bid by Coca-Cola worth $US2.4 billion for Huiyuan Juice Group - the biggest maker of fruit juice in the country.
The BBC reports the sale would have been the largest takeover of a Chinese company by a foreign rival.
But rival juice makers said the deal would give Coca-Cola too much dominance in the beverage market.
Huiyuan has about a 40% share of the Chinese juice market.
Last year the government introduced tough anti-monopoly laws.
Investors had been waiting for the decision by the Ministry of Commerce on whether the Huiyuan deal could go ahead, as a test of China's attitudes towards overseas investment in the wake of the new legislation.