Article Summary
In late 2017, informed sources announced that telecommunications companies T-Mobile and Sprint were engaged in active discussions about a potential merger. The 3rd and 4th largest wireless carriers in the United States have had frequent conversations about a stock-for-stock merger, with T-Mobile parent Deutsche Telekom becoming the majority owner of the combined firms and T-Mobile CEO John Legere expected to lead the company. Part of the discussions have been whether the Department of Justice and the Federal Trade Commission would approve the merger, and based on those discussions, whether both companies will choose to proceed with a deal.
Source: David Faber, "T-Mobile and Sprint are in active talks about a merger," cnbc.com, September 19, 2017.
-Refer to the Article Summary.The standards used by the Department of Justice and the FTC to evaluate a potential merger such as the one between T-Mobile and Sprint are based on market concentration as determined by the
A)Herfindahl-Hirschman Index.
B)Clayton Antitrust Act.
C)Anti-Collusion Task Force.
D)Robinson-Patman Act.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a commonly used measure of market concentration by the Department of Justice and the Federal Trade Commission when evaluating potential mergers. It is calculated by squaring the market share of each firm in a particular industry and adding those values together. A higher HHI indicates a more concentrated market, which may raise antitrust concerns. The other options (B-D) are not relevant to the standards used to evaluate a potential merger based on market concentration.

Article Summary In Late 2017, Informed Sources Announced That Telecommunications Companies T-Mobile