The standards used by the Department of Justice and the FTC to evaluate a potential merger 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 Department of Justice and the FTC use the Herfindahl-Hirschman Index (HHI) to evaluate a potential merger. The HHI measures market concentration by adding the squared market shares of all firms in a market. The higher the HHI, the more concentrated the market and the greater potential for anti-competitive effects of a merger. The agencies use a threshold of 1,500 points for an HHI increase of 100 or more points post-merger as a presumptive measure of likely competitive harm, and an HHI above 2,500 points as a highly concentrated market.

The Standards Used by the Department of Justice and the FTC