Oil services giants Halliburton and Baker Hughes abandoned a $34 billion merger late Sunday, bowing to Justice Department complaints that the deal would lead to decreased competition and higher prices.
“The companies’ decision to abandon this transaction – which would have left many oilfield service markets in the hands of a duopoly – is a victory for the U.S. economy and for all Americans,” Attorney General Loretta E. Lynch said in a statement.
“This case serves as a stark reminder that no merger is too big or too complex to be challenged.”
The deal would have combined two of the three largest oilfield services companies in the world. But last month, the Justice Department sued to block the deal.
“The merger of Halliburton and Baker Hughes would have raised prices, decreased output and lessened innovation in at least 23 oilfield products and services critical to the nation’s energy supply,” David I. Gelfand, a deputy assistant attorney general, said in a statement.
Halliburton and Baker Hughes initially said they would fight the Justice Department’s suit, arguing that the merger would have allowed the companies to operate more effectively, which is increasingly important because of low oil prices. Halliburton had offered to divest some of its operations as part of the deal, but it was not enough to satisfy regulators.
“Today’s outcome is disappointing because of our strong belief in the vast potential of the business combination to deliver benefits for shareholders, customers and both companies’ employees,” Martin Craighead, Baker Hughes’s chairman, said in a statement.
This is just the latest win for federal regulators, which have been aggressively challenging mergers lately. In December, General Electric called off the $3.3 billion sale of its appliance division to Electrolux of Sweden after facing resistance from the Justice Department. Meanwhile, the the Federal Trade Commission is attempting to block the merger of Staples and Office Depot.