Question
4. (12) Staples and Office Depot, the two largest office retailers, tried to merge in 2018. The proposed merger was blocked on the grounds that
4. (12) Staples and Office Depot, the two largest office retailers, tried to merge in 2018. The proposed merger was blocked on the grounds that it violated antitrust law. The FTC's ruling can be found here: https://www.ftc.gov/system/files/documents/cases/051016staplesopinion.pdf
a.) (4) The FTC argued that the Herfindahl-Hirshmann Index (HHI) would have increased from 3270 to 6265; the companies had been argued that the post-merger HHI would have been below 2000. Explain how there can be such a large disparity in the estimates of the HHI. What is it that determines which measure is accurate? b.) (4) The ruling notes that the HHI is not the only the sole determinant as to whether a large merger is approved or rejected. What other major factors in addition to the HHI are considered in the approval decision? c.) (4) Do you think the court was correct to grant the injunction (block the merger) or not? Explain.
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