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*Mike Ramey

*Coca-Cola’s acquisition of leading Brazilian bottled tea maker Leão Júnior has been approved by the country’s competition investigators – apparently dashing arch rival PepsiCo’s hopes of blocking the deal.

The Brazilian Justice Ministry’s Secretariat of Economic Law (SDE), which is responsible for investigating possible competition issues, said it had cleared Coke’s purchase of Leão Júnior without restriction. The SDE’s finding has now been passed to the Administrative Council for Economic Defense (CADE), a tribunal of seven commissioners which makes the final ruling on mergers and takeovers.

Coca-Cola announced in March last year that its Brazilian unit had clinched a deal to acquire Leão Júnior and its flagship brand, Matte Leão, plus the company's three production plants in southern Brazil. The purchase price was not disclosed, but was estimated by local sources to be around BRL230 million ($112 million).

Within days of Coke’s announcement, PepsiCo filed an objection to the deal with CADE. Pepsi claimed that combining Leão Júnior with Coca-Cola’s existing interests would result in an unhealthy concentration of power that would ultimately damage Brazil’s tea and yerba mate industry. * RTD mate a big seller * Matte Leão is one of Brazil’s most popular brands of ready to drink (RTD) mate, the tea-like beverage of South America. Although mate is traditionally brewed from dried leaf in a small gourd, and sucked through a metal reed, RTD mate is also a big seller these days.

As well as mate, Leão Júnior also makes a wide range of iced teas, green teas, guarana drinks and infusions. Sales rose more than 18% to BRL158.9 million ($77.3 million) in 2006, the last year for which data is available, giving Leão Júnior a market share of almost 46% by value.

Lipton Iced Tea, distributed by AmBev in partnership with PepsiCo, had a market share of 24.7%, while Nestea – distributed by Coca-Cola in partnership with Nestlé – had a 24.4% share.

Coca-Cola has been expanding strongly in the Brazilian market for non-carbonated beverages in recent years. In 2005, Coca-Cola Brasil bought a controlling stake in Sucos Mais, the country’s No2 juice maker. At the beginning of last year, Coca-Cola and bottler Coca-Cola FEMSA also acquired Mexican juice maker Jugos del Valle, which leads the Brazilian market.