SKIP (1)

and just 2, 3, and 4

Read the first section of this document. What is this document? Skim the rest of the document. Pay special attention to section 5 (pages 18 and 19). Note the HHI guidelines (these may well turn up in an exam). Say an industry has 12 firms. One firm has a market share of 30%. One firm has a market share of 10%. One firm has a market share of 15%. The other nine (small firms) have shares of 5%. What is the HHI of this industry? Now imagine two of the smaller firms were to merge. The post merger market share for the merged firm are forecast to be the sum of pre-merger market shares. Would this merger attract attention from the DOJ? Would this merger be presumed to be anticompetitive? Say one of these smaller firms have a strategy in which they merge with other small firms, one after the other. In each case, the post merger market share for the merged firm are forecast to be the sum of pre-merger market shares. How many small firms can they absorb, before the DOJ presumes the merger to be anticompetitive