Is DOJ probe into Halliburton and Baker Hughes in antitrust investigation unjustified?

Is the Department Of Justice www.justice.org probe into Halliburton www.hallibuton.com and Baker Hughes www.bakerhughes.com in an antitrust probe unjustified?

The definition of ANTITRUST is : Opposing or intended to regulate business monopolies, such as trusts or cartels, especially in the interest of promoting competition: antitrust legislation.

This means those being looked into may have the ability to monopolize a business sector. This particular case, the Department of Justice’s Antitrust Division is probing “The hydraulic fracturing with the DOJ looking into the possibility of anticompetitive practices involving pressure pumping performed on oil and gas wells.”

Here is why this probe will fall on flat on its face and/or will fade away quickly. Halliburton on holds approximatly 18% share of the “practices involving pressure pumping performed on oil and gas wells”. Add to this Baker Hughes at approximate 12% and a total of 30% share does not even come close to meeting the minimum threshold of an antitrust suit.

What appears just as odd is the company holding the two ranking in “practices involving pressure pumping performed on oil and gas wells” Schlumberger www.schlumberger.com is apparently not involved in the probe given it was not to my knowledge mentioned in their 10Q report. Schlumberger has an approximate 13% share in the “practices involving pressure pumping performed on oil and gas wells”.

So let us total the top three approximate percent share of market; Halliburton at 18%, Schlumberger at 13% and Baker Hughes at 12% for a grand total share of market of 43%. Yes, only 43%. So, even taking the top three players will not breach a 51% share. To break the minimum barrier we must add the fourth position held by either Weatherford www.weatherford.com or Frac Tech www.fractech.com both with an estimated 10% share.

Summary, if it takes four of the largest companies to reach the 51% is there any chance that number 1 Halliburton and number 3 Baker Hughes have a monopoly?

So why the probe? It appears there are two possible reasons- First, the DOJ was not aware that the second largest company Schlumberger which has “practices involving pressure pumping performed on oil and gas wells ” actually exists or they are targeting high profile companies to please their green, anti-fracturing base. In either case it is about to get very embarrassing for the DOJ.

I have two suggestions: 1) DOJ drop your unwarned probe 2) Schlumberger, stay out of the crosshairs.

 

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