Article Summary
In an attempt to get approval for a $6.3 billion merger with Office Depot, Staples met with FTC regulators to discuss the possible sale of assets so the merger can proceed. The Competition Bureau of the FTC had previously indicated that it would not approve the merger as initially structured, but Staples expressed optimism that it would be able to reach a settlement with the FTC. Critics have argued that a merger of Staples and Office Depot will result in higher prices for office supplies.
Source: Josh Kosman, "Staples still angling for Office Max merger," New York Post, October 14, 2015.
-Refer to the Article Summary above.A merger between two competitors such as Staples and Office Depot may ultimately be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.
A)increases in revenue for the merged company
B)an increase in the HHI to over 1,800
C)decreases in marginal revenue for the merged company
D)increases in economic efficiency

Question

Quizplus · Accepted Answer

The best choice is D because for a merger to be approved, the merging companies must demonstrate that there will be an increase in economic efficiency as a result of the merger. This means that the merged company will be more productive and efficient, which could potentially result in lower prices for consumers. A and B are not necessarily true and C is unlikely as a goal for a merger.

Article Summary In an Attempt to Get Approval for a $6.3 Billion