The deal, valued at $34.6 billion when announced in late 2014, shortly after oil prices began to fall, would combine two of the world's three leading providers of those services to oil and gas companies. It would create a bigger rival to the industry leader, Schlumberger (SLB).
But Justice Department officials say in their lawsuit that the Halliburton-Baker Hughes deal threatens to raise prices and eliminate head-to-head competition in markets for 23 products or services used for on- and off-shore oil exploration and production in the United States.
The suit was filed in federal court in Delaware, where both companies are incorporated.
"The proposed deal between Halliburton and Baker Hughes would eliminate vital competition, skew energy markets and harm American consumers," Attorney General Loretta Lynch said in a statement. "Our action makes clear that the Justice Department is committed to vigorously enforcing our antitrust laws.."
"This transaction is unprecedented in the breadth and scope of competitive overlaps and antitrust issues it presents," Assistant Attorney General Bill Baer of the department's Antitrust Division, added. "Halliburton and Baker Hughes are two of the three largest integrated oilfield service companies across the globe, and they compete to invent and sell products and services that are critical to energy exploration and production. We need to maintain meaningful competition in this important sector of our economy."