Subscribe

Justice Department files suit to block Halliburton-Baker Hughes merger, preserve competition

The Justice Department has filed suit to block two of the biggest oilfield services firms from merging.

  • close
    An unidentified worker passes a truck owned by Halliburton at a remote site for natural-gas producer Williams in Rulison, Colo. (April 15, 2009, file photo). Halliburton is buying rival oilfield services company Baker Hughes in a cash-and-stock deal worth $34.6 billion. The deal comes shortly after talks had stalled and Halliburton prepared to go hostile with its takeover bid.
    David Zalubowski/AP/File
    View Caption
  • About video ads
    View Caption
of

WASHINGTON (AP) — The Justice Department on Wednesday sued to stop Halliburton Co. from acquiring oilfield services rival Baker Hughes Inc., saying the deal would eliminate head-to-head competition and harm consumers.

The proposed transaction, valued at nearly $35 billion, would combine two of the world's three leading providers of those services to oil and gas companies and create a bigger rival to the industry leader, Schlumberger Ltd.

But the Justice Department warned in its complaint that the proposed consolidation would lead to higher prices and stifle innovation in an industry that fiercely competes for the business of exploration and production companies and to develop technologies for deeper drilling.

"The U.S. economy, American consumers, and those who engage in the production of energy consumed in the United States cannot be asked to accept the risk to competition posed by this transaction," the department said in its complaint.

The deal would harm competition in 23 separate markets, creating "non-competitive duopolies," Attorney General Loretta Lynch said in a conference call with reporters.

Halliburton and Baker Hughes announced their plan to combine in November 2014, shortly after oil prices began to fall. Few, however, predicted the depth and duration of lower prices caused by a global oversupply of oil.

The glut has slowed demand for drilling services and crushed the stock price of both companies.

In a joint statement Wednesday, the companies called the deal "pro-competitive" and said customers would benefit "from a more flexible, innovative, and efficient oilfield services company.

"The transaction will provide customers with access to high quality and more efficient products and services, and an opportunity to reduce their cost per barrel of oil equivalent," the statement said.

Justice Department officials say the companies were well aware at the time that their proposal raised antitrust concerns but went ahead with it anyway. They say the companies' proposed fix — in which assets and an array of products and services would be sold off — is "complicated and convoluted" and does nothing to address the problem.

"I've seen a lot of problematic mergers in my time, but I have never seen one that poses so many antitrust problems in so many markets," said Assistant Attorney General Bill Baer, head of the Justice Department's antitrust division.

_______________

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK