Two of Houston's three large oilfield services companies on Sunday called off their proposed merger amid low oil prices and opposition from federal regulators.
Halliburton and Baker Hughes announced the $35 billion deal in November 2014 as oil prices were in the process of losing about half their value between mid-2014 and the end of the year.
In the wake of the price crash, Halliburton, Baker Hughes and market leader Schlumberger each announced thousands of layoffs, and prices remained low throughout 2015 and into early this year.
Antitrust regulators, meanwhile, argued that the proposed merger would wreak havoc on oil exploration in the U.S. and result in rising prices, falling oil and gas output and reduced industry innovation. The Justice Department sued to block the deal early last month.
"The companies' decision to abandon this transaction — which would have left many oilfield service markets in the hands of a duopoly — is a victory for the U.S. economy and for all Americans," Attorney General Loretta Lynch said in a statement.
Halliburton will pay Baker Hughes a $3.5 billion fee to terminate the deal. Executives from both companies said that they were disappointed in the collapse of the merger and said it could have produced substantial benefits for both shareholders and customers.
"This was an extremely complex, global transaction and, ultimately, a solution could not be found to satisfy the antitrust concerns of regulators, both in the United States and abroad," said Baker Hughes Chairman and CEO Martin Craighead.