Halliburton and Baker Hughes have abandoned their proposed merger after resistance from regulators in the US and Europe.

The deal would have seen a $34.6 billion takeover by Halliburton of Baker Hughes, creating a powerful rival to global leader Schlumberger.

The US companies are the second and third biggest oil services companies.

That raised concerns about higher prices and reduced competition.

Baker Hughes stands to receive a $3.5 billion break-up fee as a result of the deal falling through.

Failure to satisfy regulatory concerns was not the only reason for abandoning the merger.

The fall in the oil price since the proposal was announced in 2014 changed the financial attractiveness of the cash and shares deal.

The DoJ filed a lawsuit to stop the merger in April, arguing it would leave only two dominant suppliers in the well drilling and oil construction services industry.

The European Commission also expressed concerns that the deal might reduce competition and innovation.

Halliburton and Baker Hughes have been hit by a fall in business as oil and gas giants rein back on projects and investments.

Last week, Baker Hughes reported a bigger-than-expected loss for Q1 of 2016.

In April, Halliburton announced 6,000 job cuts.