EU Opens In-Depth Probe Of Halliburton Merger
January 13 2016 - 3:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 1/13/16)
By Tom Fairless
BRUSSELS -- Halliburton Co. faces a stiffer test of its $35
billion deal for rival Baker Hughes Inc. after European Union
regulators opened a full-blown antitrust investigation into the
acquisition, warning it raised "serious potential competition
concerns."
The merger, which would unite the second- and third-largest
oil-field services suppliers, already faces a growing list of
antitrust concerns in the U.S., while the slump in oil prices
complicates the firms' efforts to find buyers for any assets that
might need to be sold to assuage regulators.
The European Commission, the EU's top antitrust authority, said
Tuesday it would open an in-depth probe into the merger after its
initial inquiry revealed that the firms "seem to be close
competitors, both in terms of tenders and in innovation."
The merger would eliminate one of only four large global firms
in the sector, the regulator said, the other two being market
leader Schlumberger Ltd. and a smaller competitor, Weatherford
International Ltd.
Margrethe Vestager, the EU's antitrust chief, said her agency
"has to look closely" at the deal to ensure that "it would not
reduce choice or push up prices for oil and gas exploration and
production services in the EU."
Such in-depth inquiries are common for large merger reviews in
Brussels and don't necessarily mean a deal will be blocked. If the
EU confirms its concerns, the companies also can decide to offer
concessions, such as selling assets, to satisfy the regulator.
If those aren't deemed sufficient, Brussels can block the
deal.
Halliburton and Baker Hughes said the EU's decision was a
"normal step" in its merger review process, and that they expected
to offer up a "substantial remedies package" that they believe will
address "any substantive competition concerns."
They said the deal so far has received regulatory clearances in
Canada, Colombia, Ecuador, Kazakhstan, South Africa and Turkey.
The EU has until May 26 to make a final decision.
The EU said its initial probe had indicated "serious potential
competition concerns" in more than 30 product and service lines,
both for offshore and onshore businesses.
The two companies supply a range of tools and services for
drilling and evaluation as well as completion and production of oil
and gas wells.
The commission said it believes that only three companies are
able to provide integrated services across many product and service
lines in the oil-field-services sector, namely Halliburton, Baker
Hughes and Schlumberger.
The deal would therefore reduce the number of integrated service
providers from three to two, "which may lead to less choice and
potentially higher prices for customers," the regulator said.
Ms. Vestager said it was important to get the review right.
(END) Dow Jones Newswires
January 13, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Halliburton (NYSE:HAL.WD)
Historical Stock Chart
From Jul 2024 to Jul 2024
Halliburton (NYSE:HAL.WD)
Historical Stock Chart
From Jul 2023 to Jul 2024