The merger between Halliburton (HAL) - Get Report and Baker Hughes (BHI) is dead, the companies and the Department of Justice confirmed Sunday evening.

"The merger of Halliburton and Baker Hughes would have raised prices, decreased output and lessened innovation in at least 23 oilfield products and services critical to the nation's energy supply," Deputy Assistant Attorney General David I. Gelfand of the DOJ's Antitrust Division said in a statement. "We achieved the only result that could adequately protect American consumers -- an abandonment of this unlawful merger."

According to the DOJ statement, Halliburton and Baker Hughes abandoned their planned merger in response to the government's civil antitrust lawsuit in the U.S. District Court in Delaware, filed April 6, seeking to block the merger.

In a statement, Halliburton chairman and CEO Dave Lesar attributed the deal's failure to "challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics," while his counterpart at Baker Hughes, Martin Craighead, reiterated his belief in "the vast potential of the business combination to deliver benefits for shareholders, customers and both companies' employees."

Halliburton announced plans to acquire Baker Hughes on Nov. 17, 2014. If consummated, the merger would have combined the second- and third-largest oilfield services firms in the world after Schlumberger (SLB) - Get Report .

The cash-and-stock acquisition was worth originally about $35 billion, but its value fell to about $28 billion as shares of both companies dropped since the announcement.

Halliburton now owes Baker Hughes a $3.5 billion termination fee, which the company said it will pay by Wednesday.

The Wall Street Journal was the first news outlet to report that the deal was off.

Halliburton's acquisition was expected to close in the second half of 2015. When the merger was announced, the companies said they would sell businesses that generate up to $7.5 billion in revenues, if required, to comply with regulatory scrutiny, although they anticipated divestitures of a much smaller scale.

However, the merger brought more scrutiny than the companies had anticipated. In addition to the Justice Department's lawsuit, regulators in Europe, Brazil and Australia seemed similarly unlikely to bless the deal.

The DOJ statement also said the proposed divestitures "generally failed to replicate the robust competition between the parties that exists today."

Last week, Halliburton said it would delay reporting its first-quarter earnings until May 3 because of the upcoming April 30 merger deadline, a sign to company watchers that the deal would likely be canceled.

The deal's implosion comes as both companies have been hurt by low energy prices. In its own earnings report last week, Baker Hughes warned that rig counts will continue to fall, while Halliburton plans to cut thousands of jobs.