When the anticompetitive effects of a horizontal merger are considered, the Justice Department is most likely going to consider very closely:
A) the size of and change in the Herfindahl-Hirschman index.
B) market share only.
C) changes in the Herfindahl-Hirschman index, but not the absolute size of the index.
D) only one thing: Is the merger illegal per se?

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman index (HHI) is a widely used tool to measure the concentration of a market. The Justice Department considers both the size of the index and the change in the index resulting from a potential merger when assessing the anticompetitive effects of horizontal mergers. Therefore, choice A is the best answer. Market share alone is too simplistic and does not take into account the broader market and competitive landscape. The absolute size of the HHI is also important, as a larger index can indicate higher concentration and potential barriers to entry. Finally, while there are certain mergers that are deemed illegal per se (such as those that result in a monopoly), the majority of mergers are evaluated based on their potential impact on competition, which includes looking at market concentration and the change in the HHI.

When the Anticompetitive Effects of a Horizontal Merger Are Considered