Assume an industry is composed of the following eight firms.

CompanyMarket Share

Firm A...........30 percent

Firm B...........25 percent

Firm C...........15 percent

Firm D ...........10 percent

Firm E........... 7 percent

Firm F........... 6 percent

Firm G........... 4 percent

Firm H........... 3 percent

HHI= sum of square of shares of all firms.

a. If Firms B and C propose a merge, would the Antitrust Division likely challenge the merger? Why or why not?

b. If firms G and H propose a merger, would the Antitrust Division likely challenge the merger? Why or why not? 1984the rise in HHI is only 24-no action is warranted.