Suppose you are an economist working for the Antitrust Division of the Justice Department. In each of the following cases you are given the task of determining whether the behavior warrants an antitrust investigation for possible illegal acts oris just an example of undesirable, but not illegal, tacit collusion. Explain your reasoning.

a. Two companies dominate the industry for industrial lasers. Several people sit on the boards of directors of both companies.

b. Three banks dominate the market for banking in a given state. Their profits have been going up recently as they add new fees for customer transactions. Advertising among the banks is fierce, and new branches are springing up in many locations.

c. The two oil companies that produce most of the petroleum for the western half of the United States have decided to forgo building their own pipelines and to share a common pipeline, the only means of transporting petroleum products to that market.

d. The two major companies that dominate the market for herbal supplements have each created a subsidiary that sells the same product as the parent company in large quantities but with a generic name.

e. The two largest credit card companies, Passport and OmniCard, have required all retailers who accept their cards to agree to limit their use of rival credit cards.
In 2015, Anheuser-Busch InBev offered $104.2 billion to acquire SABMiller. The US. Justice Department approved the merger, but only after the two beer giants agreed to sell off a number of brands, including Miller Lite, Peroni, and Snow (the world’s top selling beer produced in China). Anheuser-Busch InBev sought the merger to increase its global market share. The accompanying table presents the global market share before and after the merger for the world’s ten largest brewers.
Market share

a. Using the table, calculate the HHI for the global beer market both before and after the merger.

b, Based on the HHI calculated in part

a, how has the market structure for the global beer industry changed?
12, In 2011, the Justice Department rejected AT&T’s proposal to purchase T-Mobile for $39 billion due to anticompetitive concerns. A few years later, Sprint launched its own attempt to purchase T-Mobile. In 2016, Sprint’s discussions with T- Mobile about a potential takeover were still ongoing.

a. Use the accompanying table to calculate the HHI before and after the proposed 2011 merger of AT&T and T-Mobile.

b. Use the table to calculate the HHI before and after the proposed merger of Sprint and T-Mobile in 2016.

c. Based on your calculations in parts a and

b, do you think the Justice Department is likely to approve a merger between Sprint and T-Mobile?
Carrier 2011 2016 Verizon 34% 35%
AT&T 32 32 Sprint 17 14 T-Mobile 10 17