A merger between two competitors may 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 Department of Justice and the FTC are interested in promoting economic efficiency, which can result from a merger. Increases in revenue for the merged company (A) may not always be a sufficient justification for approving a merger, as it could lead to market power that harms consumers. An increase in the HHI to over 1,800 (B) would indicate a highly concentrated market and raise antitrust concerns. Decreases in marginal revenue for the merged company (C) would not be a positive outcome and would not justify a merger.

A Merger Between Two Competitors May Be Approved by the Department