As Federal Trade Commission (FTC) officials prepare to make a case against the PepsiCo/Quaker Oats deal, PepsiCo has postponed plans to sell its All Sport sports drink to Atlanta-based Monarch Co, a report in the Wall Street Journal says.

Analysts still believe the Quaker deal will receive approval, however concerns have been raised that the sale of All Sport, seen as a prerequisite to Pepsi receiving approval, to Monarch will only see the brand disappear. Fears surround the size of Monarch, which critics say is too small to drive the brand in a market dominated by Gatorade.

According to Datamonitor, the industry analysts, the FTC is worried the merger between Quaker and Pepsi and the arrival of Gatorade in the cola giant's portfolio will diminish the ability of smaller sports drinks brands to compete on store shelves and in distribution channels.

"Word is that the FTC believes the US$13.8bn merger approved by shareholders last month would create an anti-competitive atmosphere within the sports drink market and give the company unfair control over its relationships with convenience stores," said Datamonitor.

"The sports and energy drinks market has recently shown signs of finally emerging as a mature market. The category grew an impressive 7.5% from 1999 to reach US$1.89bn in 2000. Volume jumped 6.4% to reach 679.5m gallons in the same period. Currently Quaker's Gatorade brand accounts for 80% of the market.

"No wonder then that small manufacturers and the FTC are concerned about maintaining a competitive balance. PepsiCo also recently acquired a cousin of Gatorade, SoBe beverages, adding fuel to the competitive fire," Datamonitor continued.

Earlier this month PepsiCo said the PepsiCo/Quaker deal would be delayed until the third quarter as talks with regulators continue.