The Department of Justice’s Antitrust Division has reached a settlement with two major energy services companies seeking to merge, according to a DOJ announcement yesterday.
The two Houston-based companies, Baker Hughes Inc. and the BJ Services Co., are two of just four firms that provide so-called stimulation services used to prevent sand from interfering with the flow of oil and gas from wells in the Gulf of Mexico.
To address potential antitrust concerns, the two companies have agreed to divest "two especially equipped vessels and other assets" used for providing stimulation services, according to the terms of the settlement.
Without these changes, the department warned that a merger would permit the now three-company industry to "compete less aggressively, leading to higher prices and a reduction in service quality," according to the DOJ’s lawsuit filed yesterday in the U.S. District Court for the District of Columbia.
The lawsuit highlighted the challenges and high costs relating to stimulation services as barriers to entry for future competitors.
The companies’ shareholders approved the merger in March.
According to the DOJ announcement, last year Baker Hughes recorded $9.7 billion in revenue and BJ Services recorded $4.1 billion.
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Posted by: susan | April 29, 2010 at 02:25 AM