Token tweaks won’t save bad mergers, Lynch says after challenge to Halliburton-Baker Hughes deal

6 April 2016. By Richard Vanderford.

The US won’t settle challenges to mergers in exchange for token tweaks, like divestitures, from companies, US Attorney General Loretta Lynch said, vowing to prosecute suits “to the very end.”

The “mere act of divestiture” or small spinoffs won’t placate the government, Lynch said at a conference in Washington.*

The attorney general made her remarks hours after the US Justice Department sued to block Halliburton’s plan to buy rival Baker Hughes to form an oilfield services behemoth.

“The Department of Justice is not interested in settling for the sake of settling,” Lynch said. “If we believe that no good solution exists, we will prosecute our suits to the very end.”

“We will not waver one iota in our duty to the American people,” she said.

Lynch’s remarks come in the wake of quickened corporate consolidation — in fiscal year 2015, companies proposed more than 67 mergers valued at $10 billion, more than twice the number from the previous year, she said.

Lynch highlighted several mergers scuttled by DOJ intervention, including proposed tie-ups between cable providers Comcast and Time Warner, and wireless providers AT&T and T-Mobile.

Even starting the merger process in those “problematic” cases was little more than a “waste of corporate and taxpayer dollars.” But Lynch reserved particular ire for the Halliburton-Baker Hughes deal.

That merger, she said, could imperil competition in more than 20 markets, but also threaten US energy independence, possibly compromising national security.

“Put simply, it’s a bad deal,” she said.

A proposal by Halliburton to divest some assets falls “well short” of preserving competition, she said.

Halliburton and Baker Hughes said in a joint statement that they intend to “vigorously contest” the Justice Department challenge to their merger, which they said would create a more efficient company better able to weather the prevailing cheap oil prices.