European Union Antitrust regulators decided to warn Halliburton on its merger deal with Baker Hughes. The acquisition is deemed to hurt competition in the oil service industry.
According to Reuters, the move from EU will add burden to Halliburton's deal after the U.S. Justice Department filed a lawsuit this month to stop the deal. The new company from the merger will be the only competitor of Schlumberger in the 23 products and services used in oil exploration.
European Commission will issue the warning in the form of statement of objection which will be issued as soon as next week. The statement indicated that EU antitrust regulator has firmly decided to block the merger, unless the companies provide concession to alleviate the concern.
Halliburton and Baker Hughes representative to EU declined to comment regarding the news. Neither does spokeswoman for Halliburton Emily Mir, nor Baker Hughes' spokeswoman Melanie Kania.
Last week, European Commission had resume its investigation on the merger deal between Halliburton and Baker Hughes. The European Commission spokeperson Richard Cardoso in an email statement said, "Once the requested missing information is provided the Commission restarts the clock."
The statement of objections from European Union addresses concern about how the deal will hurt competition throughout the EU. According to Bloomberg, the decision was informed by two people which are familiar with the case, who asked not to be named, because the procedure isn't public.
European Union Antitrust Commissioner Margrethe Vestager had told a reporter earlier this month that she worked closely with the United States Justice Department. As of April 6, the Justice Department had sued to block the merger between the second and the third largest oil service company in the world.
Following the news, Sonoran Weekly Review reported that Halliburton shares climbed 1% to reach upper half of its 52-week range of $27.64 to $50.20. While Baker Hughes shares was down 0.6% in its lower half of its 52-week range of $37.58 to $70.45.
Halliburton agreed to acquire Baker Hughes in a $35 billion deal in 2014. Both companies are the leader in the oilfield service, therefore a merger between them will create a dominant leader in hydraulic fracturing or fracking technology. Antitrust regulators in the U.S. and EU have raised concern that the merger will eliminate head-to-head competition, raise service prices and reduce innovation in the oilfield services industry.
In order to smooth the deal and fulfill the antitrust regulation, Halliburton had offered to divest over $5 billion of its assets. However, the Houston-based company has not made formal offer. Therefore, the U.S. Department of Justice sued to block the merger early this month.
Antitrust regulators in European Union is also reported to issue the statement of objection next week. The statement indicated that EU has decided to block the merger. This will add another trouble to the merger deal between Halliburton and Baker Hughes.
