Suppose an industry is composed of eight firms with the following market shares:
A 30% E 8%
B 25 F 5
C 15 G 4
D 10 H 3
Based on the (revised 1997) merger guidelines, would the Anitrust Division likely challenge a proposed merger between
a. Firms C and D (assume the combined market share is 25 percent)?
b. Firms F and G (assume the combined market share is 9 percent)?
Explain your answer.
The Antitrust Division's 1997 guidelines can be found at http://www.justice.gov/atr/hmerger/11251.htm
The relevant section is 1.5 - Concentration and Market Shares. The Antitrust Division uses the Herfindahl-Hirschman Index (HHI) of market ...
This solution uses the Antitrust Division's published guidelines to determine which of two proposed mergers would be challenged under antitrust law. There is a link to the Antitrust Division's guidelines, references to the relevant sections, and a file showing the HHI calculations that the Division would make.