A proposed wedding of two behemoths in the oil services industry is on the rocks after the Department of Justice filed suit to block it.
The $25 billion merger between Halliburton and Baker Hughes—the number two and three largest companies in the field—would violate “core antitrust principles,” Attorney General Loretta Lynch stated in a press call Wednesday morning, announcing the launching of litigation in a Delaware federal court.
“The proposed merger would substantially reduce competition in 23 separate markets for oil field products and services, and it would turn many of those markets into non-competitive duopolies,” Lynch said.
Halliburton had attempted to make its acquisition of Baker Hughes more palatable by promising to sell off assets, but it wasn’t enough for the DOJ. Lynch reported that its proposal was “not fixable.”
“[It’s] complicated, risky and regulatory, but most importantly, it falls far short of preserving – much less enhancing – the current competitive dynamic. Simply put, the parties’ merger puts competition at risk in too many markets,” she added.
Reuters reported that the merger would have left the new company with more than half of the cementing market in the crucial energy-producing state of North Dakota. It would have also created a behemoth with “a leading position in fracking.” The wire service noted that European Union and Australian regulators were also concerned with the deal, which would have reduced competition abroad, too.
Companies behind blockbuster mergers have found in recent years an increasingly aggressive examination of the deals by the Obama Administration.
This week, drugmaker Pfizer dropped its bid to restructure in partnership with the Irish pharmaceutical manufacturer Allergan. The merger, which was structured as an inversion, would have allowed Pfizer to move overseas to avoid paying taxes. The move was ditched, however, after the Treasury Department issued new rules on Monday reducing the incentives of such inversions.
“It really looked like they did a very fine job of constructing a rule here—a temporary rule—to stop this deal, and obviously it was successful,” Allergan’s CEO Brent Saunders told CNBC Wednesday morning.
Another high-profile merger, between Comcast and Time Warner Cable, was given the kibosh by the administration in 2015. Both parties walked away from the proposal after the Justice Department threatened a suit to block it.
The administration is, however, receiving criticism for not taking a more aggressive stance toward another proposed combination in the telecommunication industry that would see Charter Communications Inc. and Time Warner Cable join forces. Members of the Congressional Progressive Caucus penned a letter to Attorney General Lynch and Federal Communication Commission Chairman Tom Wheeler urging them to block the deal.
