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Suppose Fiat recently entered into an Agreement

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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 3,025. Case?s share of market was 27 percent, while Fiat comprised just 1 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase? Based only on this information, do you think Justice Department would challenge the merger? Explain.

 

Paper#26876 | Written in 18-Jul-2015

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