In accordance with their merger guidelines, the Justice Department and the Federal Trade Commission would probably challenge a merger if the
A)number of firms in the industry were very large.
B)industry had a Herfindahl-Hirschman index above 800 and the index rose by 80 points or more.
C)industry had a Herfindahl-Hirschman index above 1,800 and the index rose by 100 points or more.
D)industry had a Herfindahl-Hirschman index below 1,000.
E)firms' markets were very large.

Question

Quizplus · Accepted Answer

The Justice Department and the Federal Trade Commission use the Herfindahl-Hirschman Index (HHI) as a measure of market concentration to evaluate potential mergers. A merger is more likely to be challenged if it significantly increases the HHI in a market that is already highly concentrated. An industry with an HHI above 1,800 is considered highly concentrated, and an increase of 100 points or more due to a merger raises concerns about reduced competition.

In Accordance with Their Merger Guidelines, the Justice Department and the Federal