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6. Under what conditions might the Justice Department approve a merger between two companies that operate in an industry with a premerger Herfindahl- Hirschman index of 2,900 if the postmerger index is expected to increase by 225?

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Overall an industry with a post-merger Herfindahl-Hirschman index value of below 1500 is considered unconcentrated. In an extreme case. If the Herfindahl-Hirschman index in an industry exceeds 2900, it suggests that the industry is highly concentrated In that case if a merger is going to occur which is expected to raise the Herfindahl-Hirschman index by 225 points, then the FTC and DOJ might challenge a lawsuit against such merger However with such merger, some other factors are also scrutinized These include economies of scale, economies of scope, and the ease with which there is an entry possible in the industry. The agencies like FTC and DOJ try to block horizontal merger if it is expected to create unsuitable economic and business environment for other firms in the industry

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