The long wait is finally over; the U.S. Justice Department has announced it will sue to block the merger of Halliburton and Baker Hughes. This makes the merger much less likely to be consummated – so much so that I think it’s fair to operate using a base assumption that the deal is dead, even if that position is not yet official. A key tenant in industrial organization theory is that it takes three strong competitors to make an efficient market. Without three competitors, industries and companies fall prey to problems of tacit collusion, resulting in slowly higher prices and less overall economic efficiency. The HAL/BHI merger was done in by the lack of a third strong competitor. While Halliburton showed a willingness to do whatever it took to get the deal done by agreeing to divest billions of dollars of assets, in the end it was not enough. […]