The US Justice Department is blocking the merger of Halliburton and Baker Hughes06.04.2016

Shares of Halliburton (NYSE: HAL) and Baker Hughes rebounded after the US Justice Department filed a lawsuit demanding to block the merger of two oil service companies.

"The proposed transaction between Halliburton and Baker Hughes can destroy competition, distort the situation in the energy market, and harm the American consumers", - concluded the Minister of Justice Loretta Lynch in a statement on Wednesday. The merger will eliminate direct competition on the markets of 23 products and services used for exploration and development of oil fields - from drill bits to the cementing equipment installed on the shelf, according to the Ministry of Justice.

After the US Justice Department opposed the merger of the second and third-largest oilfield services providers (the leader is Schlumberger), both stocks increased by about 5% as of 14:16 GMT. They agreed on the merger in 2014, and the size of the transaction amounted to $ 35 billion.

Halliburton and Baker Hughes are going to challenge the decision, because they believe that the Ministry of Justice underestimated the highly competitive nature of the oilfield services industry.

According to some reports, quoted by CNBC, Halliburton will use the services of two law firms in the field of anti-monopoly: Rechard O'Melveny & Myers and Baker Botts.

According to people familiar with the situation, the Ministry of Justice were skeptical right from the start about the deal and Halliburton to Baker Hughes failed to address the concerns of regulators. In December, they expressed doubt that other companies will be able to buy from the merging corporations enough assets to make them serious competition.

In recent years, the US antitrust regulators significantly tightened their position, which led to a legal challenge and cancellation of a number of major transactions. Accordingly, due to the government decision, there T-Mobile has not been acquired by AT & T and the household appliances division of General Electric was not sold (Electrolux wanted it).