Four-wheel-drive tractors consisted of five firms

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a) 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 2,765. Case’s share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?

(b) Based only on this information, is the Justice Department likely to challenge the merger according to the Horizontal Merger Guidelines?

1) No.

2) Yes.

3) Possibly - but other factors will be considered.

Reference no: EM131165358

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