Question

c) Are national Concentration Ratios the correct statistics to consider when determining whether a merger of two hospitals raise antitrust concerns? What about when considering mergers in the auto industry (say, between Ford and GM)? Explain

Answer 1

FTC is using the same criteria for comparing the mergers between hospitals as it uses it for mergers between two firms. Whether the forms belong to automobile industry or Hospital industry, the FTC is using the same guidelines for checking whether the merger is reducing competition or becoming a monopoly.

The national concentration ratio is such as the four firm concentration ratio and eight firm concentration ratio are widely used for measuring the merger or consequences of merger and acquisition in different industries and the same is used for hospitals as well. The difference between the two however should be taken care of.

A vertical merger between two Hospital is very different from a vertical merger between two different firms in an industry. Hospital merger is likely to generate more benefits because of coordination between electronic data and patient care in comparison to the merger between two companies in an industry. However FTC is still believes that before merger these hospitals should adopt other means that do not alter competition level.