European Commission said it has concerns about market competition in its review of the proposed merger between Halliburton and Baker Hughes. File photo by Gary C. Caskey/UPI | License Photo
BRUSSELS, Jan. 13 (UPI) -- U.S. oil services companies Halliburton and Baker Hughes said they'd work with European officials who said they're closely reviewing their proposed merger.
The European Commission said in a review there are "serious" concerns about completion in the energy sectors serviced by Halliburton and Baker Hughes.
"In particular, the investigation revealed that Halliburton and Baker Hughes seem to be close competitors, both in terms of tenders and in innovation," the commission said in a statement.
Halliburton and Baker Hughes unveiled plans to join forces in early 2014 as lower crude oil prices started to spill over into the economics of the upstream, or exploration and production, side of the energy sector. In November, Halliburton said it was offering $7.5 billion in senior notes to be issued in five tranches, with a maximum 5 percent fixed rate for a 30-year note maturing Nov. 15, 2045, to help fund the acquisition.
The companies in a joint statement said a second-phase review process from the European Commission was part of the normal process, noting that, from their standpoint, the views expressed were only preliminary.
The European Commission found only Halliburton, Baker Hughes and Schlumberger were able to provide necessary services to the industry, adding the merger of the former two would grossly inhibit competition from smaller potential market players.
Margrethe Vestager, the European official in charge of competition policy, said keeping the sector efficient and diverse were central components of European energy policy.
"The commission has to look closely at this proposed takeover to make sure that it would not reduce choice or push up prices for oil and gas exploration and production services in the European Union," she said in a statement.
Both companies said they've already received regulatory clearance for the merger from the governments of Canada, Colombia, Ecuador, Kazakhstan, South Africa and Turkey.