In China, Huiyuan accounts for about 42% of the domestic pure juice market.
In a statement the Chinese Ministry of Commerce said the deal would "restrict competition in the drinks market, force consumers to accept products with higher prices and reduce the types of products available".
The government's rejection of the deal came despite Coca-Cola's plans to invest £2bn in China over the next three years.
China is not the only government to have taken exception to Coca-Cola's activities. Earlier this month Venezuela's president Hugo Chavez confiscated some of the company's land to create housing. Chavez described the move as part of the "transition to socialism".
Innocent is looking to secure a £30m investment to fund its own ambitions to expand internationally. Coke could be facing competition from drinks company Hero and Heinz who have been reportedly seeking a stake in the brand.
FMCG
Chinese Government blocks Coca-Cola's billion dollar bid for juice company
LONDON - The Chinese government has dealt a blow to Coca-Cola's ambitions by blocking its $2.5bn (拢1.8bn) purchase of drinks company China Huiyuan Juice Group on anti-monopoly grounds.