Which of the following findings would be the most likely to lead the U.S. Justice Department to block a corporate merger under terms of the Clayton Act?
A) a buyer-seller relationship between the two firms
B) a high premerger Herfindahl index in the industry and a large boost in the index because of the merger
C) a low pre- and postmerger concentration ratio in the industry
D) evidence that one of the firms is highly unprofitable

Question

Quizplus · Accepted Answer

A high premerger Herfindahl index in the industry and a large boost in the index because of the merger would indicate a significant increase in market power and concentration, which is a key factor in determining whether a merger violates antitrust laws. The Clayton Act prohibits mergers and acquisitions that would lessen competition or create a monopoly, and a high market concentration would suggest that the merged entity could potentially dominate the market and harm competition.

Which of the Following Findings Would Be the Most Likely