Article Summary
Arguing that a merger would lead to higher prices, reduced service, and significantly less competition, the Justice Department and attorneys general from 6 states and the District of Columbia filed a lawsuit in August to challenge the pending merger of American Airlines and US Airways. The lawsuit took some by surprise as the Justice Department has in recent years approved the mergers of Delta with Northwest and United with Continental. The European Union approved the merger in August, and American and US Airways had hoped to complete the merger by September.
Source: Even Perez, "US government seeks to block American-US Airways merger," CNN.com, August 13, 2013.
-Refer to the Article Summary. The standards used by the Department of Justice and the FTC to evaluate a potential merger such as the one between American Airlines and US Airways are based on market concentration as determined by the
A) Herfindahl-Hirschman Index.
B) Clayton Antitrust Act.
C) Anti-Collusion Task Force.
D) Robinson-Patman Act.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a commonly used tool by the Department of Justice and the Federal Trade Commission to evaluate the potential market concentration resulting from a merger. The HHI is a measure of market concentration that takes into account the market shares of all the firms in the market. The higher the HHI, the more concentrated the market, and the more likely the merger will result in reduced competition. The Clayton Antitrust Act, Anti-Collusion Task Force, and Robinson-Patman Act are all related to antitrust laws but are not the specific standards used to evaluate a potential merger.

Article Summary Arguing That a Merger Would Lead to Higher Prices, Reduced