The Local Banking Industry Currently Has a Herfindahl-Hirschman Index (HHI)

The local banking industry currently has a Herfindahl-Hirschman index (HHI) value of 1945 and two of the competing banks have considered merging. Because the merger would raise the HHI by 155 points, the Federal Trade Commission would likely

A) challenge the merger.
B) not challenge the merger.
C) allow the merger as long as the HHI did not increase by more than 155 points as promised.
D) allow the merger under the condition that the HHI remain at the premerger level of 1875.

Correct Answer:

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