Horizontal Merger Guidelines
The following table shows premerger market share data for four hypothetical markets. Assume that the Department of Justice has received a merger proposal from the third-largest and the fifth-largest competitors in each market. Attorneys for each firm have petitioned the government for advice as to whether or not their merger proposal would or would not be acceptable under the horizontal merger guidelines prom- ulgated by the FTC and DOJ.
Premerger Firm Market Share Data
|
Competitor Rank
|
Market A
|
Market B
|
Market C
|
Market D
|
|
1
|
40%
|
25%
|
10%
|
50%
|
|
2
|
30%
|
25%
|
10%
|
25%
|
|
3
|
15%
|
10%
|
8%
|
10%
|
|
4
|
10%
|
10%
|
8%
|
10%
|
|
5
|
5%
|
6%
|
8%
|
2%
|
|
6
|
|
5%
|
8%
|
2%
|
|
7
|
|
5%
|
8%
|
1%
|
|
8
|
|
5%
|
8%
|
|
|
9
|
|
5%
|
8%
|
|
|
10
|
|
4%
|
8%
|
|
|
11
|
|
|
8%
|
|
|
12
|
|
|
8%
|
|
|
Totals
|
100%
|
100%
|
100%
|
100%
|
A. Calculate the premerger HHI measures for each market and the change in the HHI assum- ing each proposed merger were approved.
B. In each market, indicate whether or not the proposed merger is apt to be approved accord- ing to the horizontal merger guidelines. Why or why not?