A rumor that Nestle might buy Hershey sent shares of the latter 3% higher Thursday, but it's an idea that has long hovered over the two, and it has never gone anywhere. It won't this time either -- certainly not with a Justice Department that exhibits an animus toward big business tie-ups, even when justified.

Back in 2002, the charitable trust that controls Hershey put the chocolate maker up for sale and Nestle was one company expected to make a bid, though it ultimately rejected the notion, saying it would never pass regulatory muster. Gum maker Wrigley's eventually offered over $12 billion for the company, but the trust decided against selling, and took Hershey off the market.

The antitrust hurdle that made a Nestle-Hershey merger untenable before still exists today. Back in 2002, Hershey accounted for 43% of the U.S. chocolate market while Nestle had a 12% share. Today, Hershey's share has inched higher to more than 44%, and while Nestle's U.S. position has been cut in half, the potential post-merger business would have a dominant position in other markets. The International Cocoa Organization lists Nestle as the third-biggest chocolate maker, behind privately held Mars and Mondelez International (NASDAQ: MDLZ), which acquired Cadbury to muscle its way into the top tier. (Mars, No. 1 worldwide, is the second-largest player in the U.S. chocolate market, with a 29.5% share.)

The Justice Department has quashed a number of proposed big merger deals that would have concentrated too much of an industry in the hands of too few players, with its latest victory being the failed merger of Staples and Office Depot.

Although that was a deal most observers agreed was smart and necessary for the suitors, considering the threat they faced from both bricks-and-mortar competition and e-commerce rivals such as Amazon.com, regulators were concerned with how much a dominant post-merger company might raise prices on office supplies (particularly for their biggest corporate customers), and sued to stop the deal.

While both Nestle and Hershey have reported slack sales in recent periods, neither can be said to be particularly weak, and a deal that would concentrate half the U.S. chocolate market in the hands of a European chocolatier is unlikely to reach fruition. Considering the costs involved in even attempting a merger, and the probability of this one's failure, expect to see this rumored deal melt away before it even has a chance to get legs.

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Rich Duprey has no position in any stocks mentioned.

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