By ERIC TUCKER and PAUL HARLOFF
Associated Press

(WASHINGTON, AP) — The Justice Department on Wednesday sued to stop Halliburton Co. from acquiring oilfield services rival Baker Hughes Inc., saying the deal would harm consumers and eliminate head-to-head competition.

The proposed transaction, valued at nearly $35 billion, would combine two of the world’s three leading providers of those services to oil and gas companies and create a bigger rival to the industry leader, Schlumberger Ltd.

But the Justice Department warned in its complaint that consolidation of the “Big Three” would lead to higher prices and weaken innovation in an industry that fiercely competes for the business of exploration and production companies and to develop technologies for deeper drilling.

“The U.S. economy, American consumers, and those who engage in the production of energy consumed in the United States cannot be asked to accept the risk to competition posed by this transaction,” the department said in its complaint.

Halliburton and Baker Hughes announced their plan to combine in November 2014, shortly after oil prices began to fall. Few, however, predicted the depth and duration of lower prices caused by a global oversupply of oil.

The glut has slowed demand for drilling services and crushed the stock price of both companies.