Baker Hughes and Halliburton, two companies that have been playing crucial roles in the energy exploration sector of the United States, have abandoned their plans for a merger worth around $34 billion.

According to these two energy giants, the U.S. Justice Department has disapproved their plans on Sunday.

On April 6, the department filed suit in order to block the merger of the two power companies. The government claims that the merger will unlawfully eliminate considerable competition in nearly two dozen markets vital to the exploration and production of oil and natural gas in the country.

"The companies' decision to abandon this transaction - which would have left many oilfield service markets in the hands of a duopoly - is a victory for the U.S. economy and for all Americans," said Loretta E. Lynch, Attorney General in a statement on Sunday.

A day after the merger was scrapped Baker Hughes Inc. set out a plan to reduce costs and buy back debt and stock and outlined the future steps it will take. The company said it would slash $500 million of costs and will consider restructuring its business while buying back $1 billion of debt and $1.5 billion of shares.

The company will source the funds for these initiatives from the break-up fee of $3.5 billion that it got from Halliburton when the deal was abandoned.

Officials at the Justice Department said that the merger between Halliburton and Baker Hughes would have increased prices, reduced output, and diminished innovation in at least 23 oilfield products and services that are crucial to the country's energy supply.

"While both companies expected the proposed merger to result in compelling benefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics led to the conclusion that termination is the best course of action," according to Dave Lesar, Chairman and CEO of Halliburton.