In 1986, PepsiCo announced its intention to buy 7-Up for $380 million and Coca-Cola said it would buy Dr Pepper for $470 million. Because the Herfindahl-Hirschman index for carbonated soft drinks is ________, the Federal Trade Commission ________ the mergers.

Question

Quizplus · Accepted Answer

A high Herfindahl-Hirschman index indicates a highly concentrated market, and the FTC is more likely to block mergers in such cases to prevent antitrust issues. Therefore, the PepsiCo-7Up and Coca-Cola-Dr Pepper mergers would likely be blocked by the FTC due to the high concentration in the carbonated soft drink market.

In 1986, PepsiCo Announced Its Intention to Buy 7-Up for $380