Suppose That Two Firms in an Industry with a Herfindahl

Multiple Choice

Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 5,500. The antitrust authorities will most likely

A) ignore this merger because of the relatively small increase in the Herfindahl index.
B) allow the merger but watch the new firm carefully for future violations of the antitrust laws.
C) allow the merger if foreign entry to the industry is possible.
D) prevent the merger, contending that it violates the Clayton Act.