Which of the following findings would be the most likely to lead the U.S.Justice Department to block a corporate merger under terms of the Clayton Act?
A) A buyer-seller relationship between the two firms.
B) A high premerger Herfindahl index in the industry and a large boost in the index because of the merger.
C) A low pre- and post-merger concentration ratio in the industry.
D) Evidence that one of the firms is highly unprofitable.

Question

Quizplus · Accepted Answer

The Clayton Act prohibits mergers that may substantially lessen competition or tend to create a monopoly in any line of commerce. A high premerger Herfindahl index (a measure of market concentration) in the industry and a large boost in the index because of the merger would indicate that the merged firm would have a significant market share and could potentially create a monopoly or reduce competition, leading the Justice Department to block the merger. A buyer-seller relationship, a low concentration ratio, or evidence of unprofitability alone would not necessarily lead to the blocking of a merger under the Clayton Act.

Which of the Following Findings Would Be the Most Likely