Two Cellular Merger Paper

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The Merger of Two Cellular Carriers There is no doubt that cell phone services in the U.S. are big business since it allows consumers to go anywhere, do anything and communicate at any time. With so much demand and so little competition there is always going to be that urge to for a bigger company to merge with a smaller one to gain more market shares and more consumers. If it were not for Herfindahl Hirschman Index (HHI) this market would probably have a monopoly on its hands. This was evident when AT&T tried to merge with T-Mobile which will be evaluated here along with how the HHI works and what would have happened if AT&T tried to merge with a smaller carrier such as TracFone. Following this examination, a brief look at the anti-trust guidelines and the pros and cons of this possible merger will be discussed. Effects of a Merger …show more content…

What is the HHI? The purpose of the HHI is to measure market concentration regarding competition both prior to a merger or acquisition and after (Samuelson & Marks, 2015). The HII is based on a scale from 0 to 10,000, with 10,000 being a monopoly and 0 indicating nearly perfect competition. The Department of Justice has identified that an HHI which falls under 1,500 is considered a competitive marketplace, go above 1,500 to 2,500 the market is considered moderately concentrated, and anything above 2,500 is highly concentrated (Investopedia, 2018). When a merger occurs and the HHI is raised by 200 than antitrust concerns can come into play (Investopedia, 2018). So where does the cellular market stand before and after a merger of AT&T and

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