EU competition commissioner Margrethe Vestager announced the formal "Phase II" probe on Tuesday, voicing concerns over the merger's potential to inflate prices in the European energy sector.
Phase II generally gives the EC 90 working days to review the pending transaction, which was first flagged in November 2014.
"The Commission has to look closely at this proposed takeover to make sure that it would not reduce choice or push up prices for oil and gas exploration and production services in the EU," Vestager said.
"Efficient exploration and production of oil and gas resources within the EU form an important element of our Energy Union strategy in terms of ensuring security of supply."
The European Union has a staggering daily bill of €1 billion ($A1.54 billion) to import more than half the energy it consumes, including more than 90% of its crude oil and 66% of its natural gas.
Many countries are also heavily reliant on a single supplier, including some that rely entirely on Russia for their natural gas.
The EU says that this dependence leaves them vulnerable to supply disruptions, whether caused by political or commercial disputes, or infrastructure failure - like in 2009 when a gas dispute between Russia and transit-country Ukraine left many EU countries with severe shortages.
To combat this issue, 38 European countries resolved to be more energy efficient, increasing energy production in the EU and diversifying supplier countries and routes.
Many of them are also in a relentless drive for renewables, but that's proving economically unsound and, in the case of the UK, the government has cracked down hard on subsidies for the sector.
The UK, which is itself facing a not insignificant push to cut ties with the EU, is desperate to get an onshore shale gas industry cranking but faces constant activist obstacles.
The EC noted this week that oil services markets already have high barriers to entry which has driven a market with only four big fish: the intended marriage partners, Schlumberger and to a lesser extent Weatherford.
The Commission's preliminary investigation indicated serious potential competition concerns in more than 30 product and service lines, both offshore and onshore - particularly that Halliburton and Baker Hughes seem to be close competitors, both in terms of tenders and in innovation.
"The ability to offer such integrated solutions represents a significant competitive advantage, for cost saving reasons in particular," the EC said of the merger between the two Houston-based, American publicly listed companies.
"Therefore, the transaction would reduce the number of integrated service providers from three to two, which may lead to less choice and potentially higher prices for customers."
The Commission is concerned that reducing the number of competitors could also reduce the incentive to innovate, especially given that Halliburton and Baker Hughes currently compete "fiercely" with each other in developing new products.
Given the worldwide scope of the companies' activities, the Commission is cooperating closely with several competition authorities, including the US Department of Justice.
Halliburton immediately moved to reassure to reassure the market that Phase II was a "normal step" in the EC's review process, and emphasised that the views that the Commission had expressed thus far were "preliminary only".
"Although the Commission was kept informed of the remedies that Halliburton has proposed to the US Department of Justice, Halliburton did not offer remedies during Phase I, as it believes that offering remedies during Phase II will facilitate a more efficient review," the two companies said in a statement.
"Halliburton expects to offer a substantial remedies package that it believes will address any substantive competition concerns."
Halliburton passed on the opportunity to propose remedies to the EC in Brussels by midnight on January 5, which led directly to Phase II being initiated. This is likely to push the EU's final deadline for a decision into May, beyond the two companies' self-imposed April 30 date to close the deal.
The transaction has so far received regulatory clearances in Canada, Colombia, Ecuador, Kazakhstan, South Africa and Turkey.
Australia's Australian Competition and Consumer Commission released a Statement of Issues on the merger last October flagging competition concerns in "a number of markets" for the supply of oilfields goods and services, and that it would delay its decision whether to the merger or not.
