Australia delays Halliburton-Baker Hughes merger

Halliburton’s $35 billion acquisition of Baker Hughes will have to wait some more as the Australian Competition and Consumer Commission (ACCC) has delayed its final decision on the acquisition until December due to competition concerns. 

Namely, the ACCC has released a Statement of Issues on the proposed acquisition by Halliburton of Baker Hughes.

The ACCC is inviting further submissions from the market in response to the Statement of Issues by November 12, 2015. As a result, the ACCC’s final decision will be deferred until December 17, 2015.

The proposed acquisition is also being considered by competition authorities in a number of jurisdictions, including the US, the European Union, India and China.

“The ACCC’s preliminary view is that the proposed acquisition is likely to raise competition concerns in a number of markets for the supply of oilfield goods and services,” ACCC Chairman Rod Sims said.

Halliburton and Baker Hughes are close competitors across a broad range of oilfield goods and services in Australia, and in many countries around the world, the ACCC said.

“The ACCC is concerned that the acquisition would result in the merged entity being one of only a small number of suppliers that could service the relevant markets. The ACCC is particularly concerned in relation to the supply of complex or high-risk projects, such as offshore drilling projects,” Sims said.

The ACCC is concerned that the merger parties are two of the ‘big 3’ global oilfield services providers. These businesses have significant competitive advantages in providing services as they benefit from extensive product ranges, economies of scale and scope, large R&D budgets and significant industry experience.

“The ACCC also considers that the proposed acquisition may create conditions that would facilitate coordinated behaviour in the market,” Sims said.

The merger parties are the second and third largest oilfield services providers, both globally and in Australia, while the fourth largest service provider, Weatherford, has a smaller share of supply and offers a narrower range of goods and services than Halliburton or Baker Hughes.

The ACCC also recently delayed its final decision on Shell-BG merger to allow additional time to consider the proposed acquisition.