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 2,715. Case's share of that market was 12 percent, while Fiat comprised just 6 percent of the market.

a. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?

b. Also, Based only on this information, is the Justice Department likely to challenge the merger according to theHorizontal Merger Guidelines?

Yes

No

Possibly - but other factors will be considered