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HHI Index

15. Nationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists the sales of the banks in the area. Use this information to calculate the four-firm concentration ratio and the Herfindahl-Hirschman index. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Justice Department is likely to challenge the proposed merger?
Bank Name Sales (in millions)
Mega Bank $900
City Bank $850
Nationwide Bank $735
Atlantic Savings $555
Bulk Bank $345
Metropolitan Bank $340
American Bank $265
Hometown Bank $120
Urban Bank $90

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Please see the attached Excel for the answer. The Justice ...

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