The decision by the European Court of Justice supports a 2002 ruling by a lower court, which found that the Commission had presented insufficient evidence to support blocking the deal.
"We are pleased to learn about the European Court of Justice's decision, which confirms the conclusions of the Court of First Instance," said Tetra Laval spokesperson Jörgen Haglind.
"Although we have not yet had time to analyse the decision in detail it seems to us to be a clear decision. We are of course happy that this matter, which has been ongoing since 2001, has finally come to an end."
This week's ruling represents a severe blow to the EC's authority and credibility. The EU Commission initially blocked the $1.5 billion (€1.5bn) merger after arguing that it would extend Tetra Laval's dominance and allow it to leverage its strength in newer, plastic bottled sectors.
But in October 2002 the EU court ruled that Brussels had failed to prove its controversial theory that the merger would enable Tetra to use its strong position in carton packaging to gain a virtual monopoly in the European market for plastic bottles made by Sidel.
The Commission then launched an appeal against the Tetra ruling, arguing that it set a dangerous precedent that would make it virtually impossible for Brussels to block future mergers. It also attempted to fine Tetra Laval €90,000 last year for providing what it called incorrect or misleading information relating to the existence of its Tetra Fast technology when it requested regulatory approval for its acquisition of French company Sidel.
The Commission said that it wanted to re-affirm that it is of the utmost importance that merger partners comply with the notification requirements outlined in the so-called form CO and provide full and correct information regarding their respective activities, especially in view of the tight legal deadlines for merger reviews.
The new Merger Regulation that came into force on 1 May 2004 foresees that companies can be fined up to 1 per cent of their aggregate turnover for supplying incorrect or misleading information as opposed to a fine of €1,000 to €50,000 under the old regulation which still applies in this case.
However, this week's ruling dismissed the Commission's appeal, issuing a strong defence of the courts' right to scrutinise the regulator's decisions.
Privately owned by the Swedish Rausing family, Tetra Laval's fortune has been built on developing systems to pack drinks, liquid foods and dairy products in laminated paper cartons. The company has about a 50 per cent share of the world market for such products and had a turnover of €8.5bn last year, according to a report in the Financial Times.
However, the empire upon which the Tetra Laval fortune has been built is a relatively stagnant one, with growth stuck at just 3 to 4 per cent a year. As a result, Tetra Laval has been wanting to increase its presence in the PET market, which has been enjoying annual growth rates of 10 per cent.
The move to buy up Sidel will give Tetra Laval a strong position in the equipment used to make plastic bottles, the technology side of the business.
PET (PolyEthylene Terephthalate) is a strong but lightweight form of clear polyester. It is used to make containers for soft drinks, juices, alcoholic drinks, water, edible oils, household cleaners, and other food and non-food applications. Bottles now represent the most significant use of PET moulding resins.
PET's major advantage is the strength of the material. Carbonated soft drinks can generate pressure inside the bottle reaching up to 6 bar. Such high pressure however, thanks to the alignment of macromolecules (cristallisation) occurring both during the resin spinning process and the blow-moulding process, is not capable of deforming the bottle nor can it make the bottle explode.