1) a)

Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?

1) b)

ased only on this information, is the Justice Department likely to challenge the merger according to theHorizontal Merger Guidelines? Pick one

• Possibly, but other factors will be considered.
• No.
• Yes.