2010: Below is die data for the erwise shp indasry S Market Share eneropernter 3

Question

2010: Below is die data for the erwise shp indasry S Market Share eneropernter 3.2% Prestige Cruoe Holday k Cruises Co Fred Olsen Cuise Lines Phoenix Reises- Boen Qark Expeditions Other Mince Companies g that the "Other Minoe Compenies" is the first merger, how many of the firms on from the botrom) can merge togsther before the presumptive challenge under the Departa Cuidelines on Horirontal Merger occurs ng this question, you must do the follows: Calculate the Herfindshl Index for the industry before uny mergers Calculate the Hertledabl Index for the list merger before the presumptive challenge Calculate the Herfindahl Index for the first merger that would be subject to the presum hallenge.

Explanation / Answer

Using the given data,

Original and before merger HHI = Sum of squares of each firm’s market share

Original and before merger HHI = 47.72 + 232 +….5.62

Original and before merger HHI = 2946.48

After merger of last two firms, the HHI becomes: 47.72 + 232 +….(5.6+0.3)2  

After merger of last two firms, the HHI becomes = 2949.84

The first merger of the last two firms (Other minor companies and Saga shipping loading) is already above the approved limit of 1800, and is thus subject to challenge.

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