1

2015 Report on Ethanol Market Concentration

I. Introduction

This Report presents the Federal Trade Commission’s (“Commission” or “FTC”) 

concentration analysis of the ethanol production industry for 2015.

1

 Section 1501(a)(2) of the 

Energy Policy Act of 2005 requires that the FTC annually “perform a market concentration 

analysis of the ethanol production industry . . . to determine whether there is sufficient 

competition among industry participants to avoid price-setting and other anticompetitive 

behavior.”2 Pursuant to the statute, the FTC must measure concentration using the HerfindahlHirschman Index (“HHI”) and consider all marketing arrangements among industry participants

in preparing its analysis.

3

 The FTC’s report is due to Congress and the Administrator of the 

Environmental Protection Agency (“EPA”) by December 1 of each year.

4

As in previous reports, FTC staff (“staff”) analyzed concentration based on production 

capacity and actual production. For each analysis, staff calculated HHIs two different ways, first

by allocating market shares among producers and then by allocating market shares among 

marketers.5

 Concentration based on producer shares is lower under either calculation than 

concentration based on marketer shares. Based on production capacity, the HHIs for the U.S.

ethanol industry range from 343 to 621. Based on actual production, the HHIs range from 332 to

 1 This Report builds upon Commission reports from previous years. Prior reports contain background information 

absent from this Report. See, e.g., FTC, Oil and Gas Industry Initiatives, Competition Policy: Reports, available at

http://www.ftc.gov/tips-advice/ competition-guidance/industry-guidance/oil-and-gas. 2 Energy Policy Act of 2005, Pub. L. No. 109-58, § 1501, 119 Stat. 1069, 1074, amended by Energy Independence 

and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492. For purposes of this Report, we presume that 

Congress used the term “price-setting” to mean “price fixing.” 3 Id. 4 Id. 5 Prior to 2014, staff also calculated HHIs by attributing the producer’s market share to its marketing firm if the 

marketing was pursuant to a pooling agreement. See, e.g., 2013 Ethanol Report, supra note 1, at 11. The industry 

largely has abandoned pooling agreements; therefore, staff no longer measures concentration on this basis.
2

714. HHIs are substantially unchanged from a year ago, with three of the four HHIs for 2015 

slightly lower (ranging from 11 to 72 points lower) than in 2014 and the other 10 points higher.

The low level of concentration and large number of market participants in the U.S. 

ethanol production industry continue to suggest that the exercise of market power to set prices, or 

coordination on price or output levels, is unlikely. As has been the case each year since the 

Commission began reporting, each of the 2015 HHIs indicates that the industry is 

unconcentrated.

6 At this level of concentration, a single ethanol producer or marketer likely 

lacks market power. Successful anticompetitive coordination would require agreement among a 

very large number of competitors and thus would be unlikely. Moreover, imports and the 

possibility of entry would impede the exercise of market power by any group of domestic firms.

II. Recent Industry Developments

A. Renewable Fuel Standard

Since 2005, Congress has required that the national transportation fuel supply contain 

a minimum annual volume of renewable fuels, including fuel ethanol.7

 This mandate, known 

as the Renewable Fuel Standard (“RFS”), increases every year. In 2007, Congress revised the 

RFS, significantly increasing the minimum volumes of ethanol and adding requirements for 

advanced biofuels.

8

 For 2015, the RFS mandates 20.5 billion gallons of renewable fuel, 15

billion gallons of which can be conventional corn ethanol.

9

 

 6 The Commission and U.S. Department of Justice characterize markets in which the HHI is below 1500 as 

unconcentrated. U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines (2010) 

(“Horizontal Merger Guidelines”) § 5.3, available at https://www.ftc.gov/sites/default/ files/attachments/mergerreview/100819hmg.pdf. 7 See Energy Policy Act of 2005 § 1501, 119 Stat. 1069. 8 “Advanced biofuel” refers to a renewable fuel, other than ethanol derived from corn starch, that has lifecycle 

greenhouse gas emissions that are at least 50 percent less than the average greenhouse gas emissions of the baseline 

fossil fuel. 42 U.S.C. § 7545(o)(1)(B)(i). Advanced biofuels include, but are not limited to, cellulosic biofuel and 

biomass-based diesel. Id. § 7545(o)(1)(B)(ii)(I)-(VII). 9 Id. § 7545(o)(2)(B)(i)(I)-(II). The statute sets a target of 5.5 billion gallons of advanced biofuels for 2015, at least 

3.0 billion gallons of which must be cellulosic biofuel. Id. § 7545(o)(2)(B)(i)(II)-(III).
3

The annual use of renewable fuels has not kept pace with the Congressional RFS. In 

2014, the United States used 15.93 billion gallons of renewable fuels,10 2.22 billion gallons 

less than the target of 18.15 billion gallons.

11 The United States consumed 13.44 billion 

gallons of the 14.4 billion gallons of conventional corn ethanol that could have counted 

toward the 2014 RFS.

12 In response to this shortfall, the EPA in June 2015 published 

proposed annual minimum mandates below those set by Congress.13 The EPA’s proposed 

total renewable fuels requirement for 2015 is 16.3 billion gallons, 13.4 billion gallons of 

which can be conventional corn ethanol.

14

One reason that ethanol use fell short of the Congressional RFS last year was the 

industry’s limited ability to consume fuel blends containing more than 10 percent ethanol 

(“E10”).15 The industry refers to this limit as the E10 blendwall.16 A small percentage of 

U.S. service stations offer higher ethanol blends, such as fuel containing 85 percent ethanol 

(“E85”) and fuel containing 15 percent ethanol (“E15”).17 Overall, however, ethanol use 

today remains at approximately 10 percent of total fuel consumption.18

 10 Renewable Fuel Standards Program: Standards for 2014, 2015, and 2016, and Biomass-Based Diesel Volume for 

2017, 80 Fed. Reg. 33,100, 33,115 (June 10, 2015) (to be codified at 40 C.F.R. pt 80), available at

http://www.gpo.gov/fdsys/pkg/FR-2015-06-10/pdf/2015-13956.pdf [hereinafter EPA Proposed Requirements]. 11 Id. 12 U.S. Energy Info. Admin., Monthly Energy Review, Table 10.3 Fuel Ethanol Overview, 

http://www.eia.gov/totalenergy/data/browser/xls.cfm?tbl=T10.03&freq=m (last modified Sept. 25, 2015). 13 See EPA Proposed Requirements, supra note 10, at 33122. 14 Id. The EPA’s proposal, like the Congressional RFS, sets a target for total renewable fuels and includes a nested 

requirement for advanced biofuels. Thus, each gallon of fuel that meets the advanced biofuels requirement also 

counts toward the total renewable fuels requirements. Once obligated parties meet the minimum requirement for 

advanced biofuels, they may meet any remaining obligation under the total renewable fuels requirement with 

conventional corn ethanol. See id. at 33103. 15 Id. at 33127. 16 Id. at 33102. 17 Of the approximately 153,000 U.S. fueling stations, approximately 323 offer mid-level fuel blends, which are 

blends between E10 and E85, and approximately 2,780 stations offer E85. K. Moriaty & J. Yanowitz, Nat’l 

Renewable Energy Laboratory, Ecoengineering, Inc., E15 & Infrastructure 2 (May 2015), available at

http://www.afdc.energy.gov/uploads/publication/e15_infrastructure.pdf; Office of Energy Efficiency & Renewable 

Energy, U.S. Dept. Energy, Ethanol Fueling Station Locations, http://www.afdc.energy.gov/fuels/ethanol

_locations.html (last modified June 17, 2015). In 2015, several companies announced plans to begin offering E15 at 

their fueling stations. See PR Newsire, Sheetz to Offer E15 Fueling Option in 2015 (Jan. 20, 2015),
4

Market participants believe that the U.S. ethanol industry will produce more than the 

13.4 billion gallons of conventional corn ethanol that can count toward the EPA’s total 

renewable fuels requirement for 2015.

19 Additional capacity will be necessary, however, to 

meet the EPA’s proposed requirement for cellulosic ethanol, an advanced biofuel. Only three 

major commercial-scale cellulosic ethanol plants, with a combined nameplate capacity of 75 

million gallons per year, are producing or plan to begin producing cellulosic ethanol in the 

near future.20 Alone, these plants’ combined capacities fall short of the EPA’s proposed 2015 

requirement of 106 million gallons of cellulosic ethanol. Because of U.S. producers’ limited 

cellulosic ethanol capacity, importers acquired 10.6 million gallons of cellulosic ethanol from 

Brazil immediately following the EPA’s announcement of its 2015 proposed requirement for 

advanced biofuels.

21 Unless U.S. producers’ combined cellulosic ethanol capacity increases 

in future years, obligated parties will have to continue to import cellulosic ethanol to meet 

future cellulosic ethanol requirements.

 

http://www.prnewswire.com/news-releases/sheetz-to-offer-e15-fueling-option-in-2015-300023113.html (Sheetz 

Convenience Stores plans to sell E15 at 60 stores in North Carolina by Spring 2016); Press Release, Protec Fuel, 

E15 Expanding Across the Southern U.S., (Sept. 2, 2014), http://www.protecfuel.com/media/protecannc28stations

e15.pdf (Protec Fuels will offer E15 and E85 at 28 fuel stations throughout the South and Southeast); Press Release, 

Kum & Go, Kum & Go to Offer E15 Fuel Options in 2015 (Apr. 27, 2015), http://www.kumandgo.com/2015/04/

e15-fuel-options/ (Kum & Go introducing E15 at more than 65 stores in Arkansas, Colorado, Iowa, Missouri, 

Nebraska, Oklahoma, and South Dakota).

18 EPA Proposed Requirements, supra note 10, at 33101.

19 Several market participants opined that total U.S. corn ethanol production will continue to rise and that production 

in 2015 will exceed the 15 billion gallons of conventional corn ethanol that can count toward the 2015 RFS. Data 

from the U.S. Energy Information Administration (“EIA”) show that from July 2014 to June 2015, the United States 

produced 14.6 billion gallons of ethanol, a five percent increase over the prior twelve-month period. U.S. Energy 

Info. Admin., U.S. Oxygenate Plant Production of Fuel Ethanol, http://www.eia.gov/dnav/pet/hist/LeafHandler

.ashx?n=pet&s=m_epooxe_yop_nus_1&f=m (last modified Sept. 30, 2015). 20 See U.S. Energy Info. Admin., Commercial-scale Cellulosic Ethanol Plant Opens (Sept. 5, 2014), 

http://www.eia.gov/todayinenergy/detail.cfm?id=17851. 21 See Reuters, U.S. Buyers Scoop Up Brazilian Ethanol Amid RIN Revival (June 15, 2015), 

http://www.reuters.com/article/2015/06/15/usa-biofuels-imports-idUSL1N0YR1XO20 150615. For 2015 to date, 

the United States has imported approximately 13.2 million gallons of cellulosic ethanol from Brazil. U.S. Energy 

Info. Admin., U.S. Imports by Country of Origin, http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epooxe

_im0_mbbl_m.htm (last modified Sept. 30, 2015).
5

B. Margins

The U.S. ethanol industry recorded positive margins through the first nine months of 

2015. Ethanol prices fluctuated slightly throughout the year, but remained below the prices 

seen throughout 2014.22 In December 2014, the price of ethanol reached $2.57 per gallon,

driving margins of $1.12 per gallon.

23 Since then, the price of ethanol has fallen, averaging 

$1.43 per gallon in the first nine months of 2015 and resulting in an average margin of $0.17

per gallon.24 Over the same period, the net cost of corn – the largest ethanol input cost –

remained relatively stable.

25 During the first seven months of 2015, the ethanol industry 

benefited from high demand for transportation fuel as Americans drove a record 1.82 trillion 

miles.26 Chart 1 plots the changes in corn prices, ethanol prices, and plant operating margins

for the period January 2010 to September 2015.

 22 Ethanol prices and margins in 2014 averaged $2.10 and $0.67 per gallon, respectively. See Iowa State University, 

Center for Agricultural and Rural Development, Historical Ethanol Operating Margins (Sept. 30, 2015), 

http://www.card.iastate.edu/research/bio/tools/hist_eth_gm.aspx. 23 Id. Margins are the difference between the revenue from ethanol plants (including revenue from ethanol and dried 

distillers grains with solubles) and variable production costs (including corn, natural gas, and labor). 24 Id. 25 The net cost of corn averaged $0.82 per gallon, with a peak of $1.01 in July 2015 and a trough of $0.72 in May 

2015. Id. 26 U.S. Energy Info. Admin., Short-Term Energy & Winter Fuels Outlook 8 (Oct. 6, 2015), http://www.eia.gov/

forecasts/steo/pdf/steo_full.pdf.
6

Source: Iowa State University, Agricultural Marketing Resource Center.

III. Summary of Market Trends

Domestic ethanol production and exports increased since last year’s Report, while 

domestic capacity remained the same. Domestic ethanol production from July 2014 through 

June 2015 increased approximately five percent from the prior 12 months, from 13.9 billion to 

14.6 billion gallons.

27 Over that same period, U.S. ethanol exports also increased, climbing from 

762 million gallons to 865 million gallons.28 Domestic ethanol production capacity (including 

capacity under construction) remained constant at approximately 15.6 billion gallons per year.

29

 27 U.S. Energy Info. Admin., 4-Week Avg U.S. Oxygenate Plant Production of Fuel Ethanol, 

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=w_epooxe_yop_nus_mbbld&f=4 (last modified Oct. 

15, 2015). 28 Id. 29 Staff’s total capacity estimate takes into account information obtained through interviews with market participants 

and publicly available information, including information published online by the Renewable Fuels Association 

(“RFA”). See, e.g., RFA, Biorefinery Locations, http://www.ethanolrfa.org/resources/biorefinery-locations/ (last 

modified Sept. 22, 2015). Interviewees routinely provide staff with operating capacities exceeding their nameplate 

capacities. Staff used the higher operating capacity when calculating capacity estimates for this Report. Staff’s 

-2

0

2

4

1/4/2010 1/4/2011 1/4/2012 1/4/2013 1/4/2014 1/4/2015

Fuel-Ethanol Price, Corn Cost, and 

Operating Margin (per gallon), Jan 2010 to 

Sep 2015

Ethanol Price ($/gallon)

Return Over Operating Costs ($/gallon)

Net Cost of Corn ($/gallon)
7

The number of firms producing ethanol decreased slightly since last year’s Report. As of 

September 2015, 146 firms produce or likely could begin producing ethanol within the next 12 to 

18 months, compared to 148 firms in September 2014. The largest ethanol producer’s share of 

domestic capacity is approximately 11 percent, unchanged from its 2014 percent share.

30

IV. Analysis

Section 1501(a)(2) of the Energy Policy Act of 2005 instructs the Commission to 

measure concentration in the U.S. ethanol production industry using HHIs.31 HHIs can provide a 

snapshot of market concentration based upon the number of market participants and their 

respective sales, production, or capacity.32 An analysis of competition among market 

participants using these HHIs assumes that the U.S. ethanol production industry is an appropriate 

antitrust market.

33 This assumption precludes consideration of a broader relevant product market 

that includes other gasoline blending components that might be economically viable and 

environmentally acceptable substitutes for ethanol. In the event that ethanol competes with other 

 capacity estimate is slightly higher than the EIA’s published total of 14.7 billion gallons. U.S. Energy Info. Admin., 

U.S. Fuel Ethanol Plant Production Capacity (June 23, 2015), http://www.eia.gov/petroleum/ethanolcapacity/. 

EIA’s capacity data are a snapshot of capacity as of January 1 of each year and exclude plants that were idle, shut 

down, or still under construction as of that month. See U.S. Energy Info. Admin., EIA Releases U.S. Fuel Ethanol 

Production Capacity Data (Nov. 30, 2011), http://www.eia.gov/todayinenergy/detail.cfm?id=4110 (describing EIA’s 

method for calculating total capacity for its first annual reports). 30 See 2014 Ethanol Report, supra note 1, at 8. 31 Energy Policy Act of 2005 § 1501(a)(2), supra note 2. A given market’s HHI is the sum of the squares of the 

individual market shares of all market participants. For example, a four-firm market with market shares of 30 

percent, 30 percent, 20 percent, and 20 percent has an HHI of 2600 [(30*30) + (30*30) + (20*20) + (20*20) = 

2600]. HHIs range from 10,000 in a one-firm (pure monopoly) market to a number close to zero in a highly 

unconcentrated market.

32 The Commission and the U.S. Department of Justice regularly use HHIs to measure concentration in a relevant 

antitrust market as part of their analysis of the likely effects of a merger or acquisition on competition in that market. 

See Horizontal Merger Guidelines, supra note 6, § 5.3. 33 A relevant antitrust market has both product and geographic aspects. A relevant product market is a product or 

group of products such that a hypothetical profit-maximizing firm that was the only seller of those products likely 

could profitably impose at least a small but significant and nontransitory increase in price (“SSNIP”). If such a price 

increase would not be profitable because of the loss of sales to other products, the product or group of products 

would not be a relevant product market. Similarly, a relevant geographic market is a region such that a hypothetical 

profit-maximizing firm that was the only seller of the relevant product in that region likely could impose at least a 

SSNIP above the competitive level. If such a price increase would not be profitable because of the loss of sales to 

sellers outside the region, the region would be too narrow to be a relevant geographic market. See id., §§4.1-4.2. 
8

blending components, HHIs based on a fuel ethanol market would understate the amount of 

competition in the industry. This assumption also precludes consideration of a broader or 

narrower relevant geographic market than the United States that could provide further insight 

about competition in ethanol.

This Report presents four HHIs for the ethanol industry, calculated using two different 

measures of market share – production capacity and actual production – and two different 

methods of allocating those market shares. First, staff calculated market shares based on 

domestic ethanol production capacity. Staff then attributed the producer’s market share to

(1) the producer itself, and (2) the producer or the third-party firm that actually marketed the 

producer’s ethanol output.

34 Staff relied on publicly available information and interviews with 

producers, marketers, and other industry participants to determine the production capacity of 

each ethanol plant and to calculate the market shares based on marketing arrangements.

Second, EIA staff calculated market shares based on actual production, attributing the 

market shares as described in the preceding paragraph. Due to the confidential nature of the 

ethanol production data the EIA collects, staff provided to EIA staff the information necessary to 

allocate market shares. 35 EIA staff performed each of the two HHI calculations and provided 

the resulting production-based HHIs.36

 34 In Reports published before December 2014, staff also attributed the producer’s market share to third-party 

marketing firms that marketed the producer’s volumes pursuant to a pooling agreement. See, e.g., 2013 Ethanol 

Report, supra note 1, at 11. As with the 2014 Report, this year staff did not attribute market share in this manner 

because ethanol marketers have largely abandoned the use of pooling agreements. See 2014 Ethanol Report, supra 

note 1, at 1-2. 35 For producers for which EIA maintains production data, staff provided EIA with the identities of those producers’ 

marketers. EIA used this information, in conjunction with its own data on ethanol production, to calculate the HHIs 

that attribute market share to marketers.

36 Because the production data are confidential, EIA staff did not disclose the volumes of ethanol attributable to any 

individual producer or the market shares based on those volumes.
9

A. Concentration with Market Shares Based on Production Capacity

For each of the HHI calculations described below, staff first calculated producers’ market 

shares based on their fuel ethanol production capacity.37 Production capacity provides a useful 

and easily confirmable indicator of a producer’s competitive significance.38 In determining each 

producer’s aggregate capacity, staff included the capacity of existing plants, as well as the 

projected capacity of plants currently under construction and plants currently undergoing 

expansion.39 Incorporating capacity from such projects into current market share calculations is 

consistent with the approach set forth in the Horizontal Merger Guidelines.40

1. Attributing Market Shares to Producers

Under the first approach to market concentration, staff allocated market share to each 

producer based on the producer’s percentage of total production capacity. This method of 

calculation yielded an HHI of 343, a level regarded as unconcentrated under the Horizontal 

Merger Guidelines.

41 This HHI is slightly higher than last year’s HHI of 333.42

 37 The RFA’s website provides frequently updated data on ethanol plant capacity and capacity expansion plans. 

Capacity information is also available on many individual producers’ websites, some of which also provide details 

of construction and expansion plans. 38 See Horizontal Merger Guidelines, supra note 6, § 5.2. In markets for homogeneous products (such as ethanol), a 

firm may derive its competitive significance primarily from its available capacity – i.e., its ability and incentive to 

increase production in the event of a competitor’s price increase or output reduction. Id.

39 Staff included the capacity of these construction and expansion projects only where the producer had finalized 

construction plans, received the necessary financing for construction, and begun physical construction. Ethanol

producers frequently announce capacity additions, new plants, plant sales, and cancellations of plans to build new 

capacity. These HHI calculations represent staff’s best estimate of the industry’s concentration as of September 

2015, the cut-off date for our analysis unless otherwise indicated. This approach therefore excludes any more recent 

publicly available information that might be relevant to industry HHI calculations. These HHI calculations also 

might not capture the full complexity of industry ownership structures, especially the degree of control by minority 

interests held by marketers or third-party management service firms. However, the HHI resulting from allocating 

production to the marketer should capture any such complexity not reflected in the producer HHI. 40 See Horizontal Merger Guidelines, supra note 6, § 5.1. Firms that are not currently producing but likely would 

respond rapidly in the event of a SSNIP have competitive significance even though they do not currently supply the 

relevant market. Id. 41 The Commission and the U.S. Department of Justice characterize markets in which the HHI is below 1500 as 

unconcentrated. HHIs between 1500 and 2500 indicate moderately concentrated markets, which may or may not 

raise competitive concerns in the context of a horizontal merger or acquisition. Markets with HHIs over 2500 are 
10

2. Attributing Market Shares to Marketers

Many producers enter into marketing agreements with third parties to market their 

ethanol to blenders and end users, while other producers sell their output directly. An ethanol

marketer may represent and make limited decisions for multiple individual producers, essentially 

aggregating these producers’ capacities under a single entity. For purposes of competitive 

analysis, attributing production capacity to marketers rather than to the actual producers provides 

a measure of industry concentration that captures this aggregation. For those producers that 

engage in direct sales, staff attributed the market shares to the producers themselves.43

This approach yields an HHI of 621, unconcentrated under the Horizontal Merger 

Guidelines. This HHI is less than the corresponding HHI of 693 in 2014.

44

B. Concentration with Market Shares Based on Actual Production

Firms that produce more than eight million gallons of oxygenates (such as ethanol) per 

year must report to EIA their monthly production volumes by product. Using production data is 

instructive because capacity data have certain limitations, particularly insofar as stated capacity 

does not necessarily represent actual production capabilities. Ethanol plants often can produce as 

much as 10 to 15 percent more than their stated design capacities and tend to operate at 

increasing rates as their owners and operators improve the production process and gain expertise 

 highly concentrated, and horizontal mergers or acquisitions in such markets are more likely to pose competitive 

concerns. See Horizontal Merger Guidelines, supra note 6, § 5.3. 42 2014 Ethanol Report, supra note 1, at 12. Some of the change to the HHI may be attributable to a producer’s 

acquisition of another producer’s facilities. In several instances, these acquisitions coincided with the restart or 

reconstruction of an idled facility. Some of the change to the HHI may also be attributable to excluding plants that 

were converted to other uses, formally closed, or judged unlikely to reopen in the near future.

43 Some marketers publicly announce new agreements with producers. Where staff could not determine whether a 

producer marketed for itself or used an outside marketing firm, staff attributed market share to the producer. 44 2014 Ethanol Report, supra note 1, at 13. 
11

in operating their plants.45 In this respect, actual production may reflect a market participant’s 

competitive significance more accurately than would its plants’ capacities.

There are some limitations on the accuracy of HHIs based on actual production, just as 

there are limitations on capacity-based HHIs. HHIs based on production over a given period 

may overstate or understate actual concentration due to entry and exit of firms, expansion of 

existing capacity, and variations in capacity utilization rates during the relevant period. 

Specifically, the production-based HHIs provided below do not fully reflect the deconcentrating 

impact of new facilities that began production during the last 12 months, nor do they fully reflect 

the concentrating impact of plant closures and idling during the period. In both cases, these 

facilities will have produced only a fraction of what they otherwise could produce in a full year, 

leading to an understatement (in the case of new facilities) or an overstatement (in the case of 

idled facilities) of their competitive significance in the market. Similarly, the HHIs below do not 

account for the effects on concentration of plant expansions within the last 12 months and 

capacity-enhancing improvement projects that are not yet in operation.

These production-based HHIs reflect actual production volumes from July 2014 through 

June 2015. Where EIA attributed the actual production market share directly to individual 

producers, the resulting HHI is 332, slightly lower than the 2014 HHI of 343.

46 The productionbased HHI calculated by attributing the market share of each producer to the firm that markets 

for that producer results in an HHI of 714, also slightly lower than the 2014 HHI of 743.

47

 45 Similarly, some ethanol producers may not be in a position to utilize their full plant capacity. Actual production 

may be a better indicator of their competitive significance in such cases.

46 2014 Ethanol Report, supra note 1, at 14. 47 Id.
12

C. Entry and Imports

The U.S. ethanol industry is unconcentrated today, suggesting that any unilateral or 

coordinated attempt to exercise market power is highly unlikely. Should the industry become 

more concentrated, the possibility of new firms entering the domestic market and the 

responsiveness of ethanol imports to relative changes in domestic ethanol prices would likely 

provide additional constraints on anticompetitive behavior by domestic firms. Potential entrants 

can purchase and restart existing production facilities that were idled due to recent economic 

conditions or can design and build new plants to enter the market.

Ethanol import levels historically have responded to fluctuations in the price of U.S. 

ethanol relative to foreign ethanol prices, particularly prices for sugar cane-based ethanol from 

Brazil.

48 This responsiveness would likely restrain any potential exercise of market power by a 

domestic firm. Additionally, to the extent U.S. prices increase because of exercise of market 

power among a group of U.S. producers or marketers, it is likely that other producers would 

react by exporting less to take advantage of more favorable U.S. ethanol prices (thereby 

increasing U.S. supply).

V. Conclusion 

Regardless of the particular measure of market share or the market share allocation 

method used to calculate concentration, ethanol production remains unconcentrated. The 

industry is less concentrated today than it was at the time of the first Report on Ethanol Market 

Concentration in 2005. Furthermore, the possibility of entry and the availability of ethanol 

imports provide additional constraints on the exercise of market power by current industry 

participants. These dynamics make it extremely unlikely that a single ethanol producer or 

 48 Brazil has been the largest exporter of ethanol to the United States every year since 2011. See U.S. Energy Info. 

Admin., U.S. Imports by Country of Origin, supra note 21.
13

marketer or a group of such firms could exercise market power to set prices or coordinate on 

price or output levels.
14

Figure 1: Domestic Fuel Ethanol Concentration49

Concentration Based on Capacity 2014 HHI 2015 HHI

Shares attributed to each producer 333 343

Shares attributed to marketers for all marketing agreements 693 621

Concentration Based on Production 2014 HHI 2015 HHI

Shares attributed to each producer 343 332

Shares attributed to marketers for all marketing agreements 743 714

Source: Production HHIs from EIA

Note: Capacity for 2014 includes the current capacity as of September 2014 and the capacity 

additions under construction and expected to be completed within 12 to 18 months after 

September 2014. Capacity for 2015 includes the current capacity as of September 2015 and the 

capacity additions under construction and expected to be completed within 12 to 18 months after 

September 2015. Production data for 2014 are from July 2013 through June 2014; production 

data for 2015 are from July 2014 through June 2015.

 49 As discussed in note 41, supra, the Commission and the Department of Justice characterize markets with HHIs 

below 1500 as unconcentrated. HHIs between 1500 and 2500 indicate moderately concentrated markets, and HHIs 

over 2500 indicate highly concentrated markets that are more likely to pose competitive concerns. An increase in 

the HHI of less than 100 points is unlikely to have adverse competitive effects. Horizontal Merger Guidelines, 

supra note 6, § 5.3.
15

0

500

1000

1500

2000

2500

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Herfindahl-Hirschman Index

Capacity (Millions per Year)

Figure 2: Historical Fuel Ethanol Capacity and HHIs

Capacity (Left Axis)

HHI (Right Axis)

Note: Annual figures are for operable capacity and capacity under construction at yearend for 1998 to 2004, and as of October for 2005 to 2015*. The HHI figures shown are 

capacity-based, with market share attributed to the producer. (*Completion expected by 

mid-2016.)