Report on Ethanol Market Concentration 

December 1, 2005 

Federal Trade Commission 
Report on Ethanol Market Concentration 

Section 1501(a)(2) of the Energy Policy Act of 2005, as codified at 42 U.S.C. 

§ 7545(o)(10), requires the Federal Trade Commission (“Commission”) to “perform a market 

concentration analysis of the ethanol production industry using the Herfindahl-Hirschman Index 

to determine whether there is sufficient competition among industry participants to avoid pricesetting and other anticompetitive behavior.” The Commission must report its findings annually 

to Congress and to the Administrator of the Environmental Protection Agency. 

Staff with energy expertise from the Commission’s Bureau of Competition and Bureau of 

Economics jointly prepared this analysis. As instructed by statute, the Commission staff 

calculated the Herfindahl-Hirschman Index (“HHI”) and, in doing so, took into account 

marketing agreements among industry participants.1 Staff prepared this analysis using publicly 

available sources, supplemented by voluntary interviews with industry participants and 

calculations from the Department of Energy’s Energy Information Administration (“EIA”). 

Based on the HHIs and on qualitative considerations of the competitive dynamics of 

ethanol production, staff concluded that U.S. ethanol production currently is not unduly 

concentrated. Given current market conditions, and assuming that ethanol production in the 

United States is a relevant market for competition analysis, the best measurement of market 

concentration yields HHIs between 499 and 1259, depending on the degree to which individual 

producers’ shares can be attributed to their common marketers.2 Under the Horizontal Merger 

1

 The HHI measures market concentration. It is calculated by adding the squared market share of 

each market participant. See Section II below. 

2

 As discussed in more detail below, these concentration figures are based on capacity, including 

expansions and plants currently under construction. 
Guidelines used by the Commission and the Department of Justice to assess the competitive 

effects of mergers, an HHI of 499 indicates an “unconcentrated” market and an HHI of 1259 

indicates a “moderately concentrated” market.3 Viewed in isolation, these concentration levels 

do not justify a presumption that one firm, or a small group of firms, could wield the market 

power necessary to set prices or coordinate on prices or output. Moreover, the concentration 

figures overstate the likelihood of anticompetitive behavior in light of significant new entry in 

ethanol production and marketing that will occur in the next year and is expected to continue for 

several more years. Furthermore, if ethanol is part of a larger antitrust product market including 

gasoline or certain gasoline blendstocks, the concentration figures would also overstate the 

likelihood of anticompetitive behavior. 

The following analysis: (1) provides a brief background regarding ethanol production and 

factors affecting ethanol demand; (2) explains how staff calculated HHIs using the capacity of 

each producer; (3) explains how HHIs may be affected by marketing agreements between 

ethanol producers and the marketers who sell ethanol downstream on their behalf; (4) calculates 

HHIs based on production rather than capacity data; and (5) discusses the importance of entry in 

understanding the analytical significance of the HHIs. 

I. Ethanol Production and Demand 

Fuel ethanol production in the United States has grown substantially in recent years, both 

in volume and in number of participants. In 2004, the U.S. ethanol industry produced 3.4 billion 

3 See U.S. Dep’t of Justice and Federal Trade Comm’n, Horizontal Merger Guidelines § 1.5 

(1992, revised 1997) [hereinafter Horizontal Merger Guidelines]. 

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gallons of fuel ethanol, more than double the volume produced in 2000.4 More than 75 different 

firms operate more than 90 fuel ethanol production facilities in the United States, with a current 

capacity of more than 4.1 billion gallons per year.5 This contrasts with 43 firms and just under 2 

billion gallons per year of capacity in late 2000.6 The largest producer’s share of capacity is 

currently around 25 percent, down from over 40 percent in 2000. The industry continues to 

expand, as incumbent producers are currently expanding existing plants and 18 new entrants are 

constructing new plants. As a result, an additional 1.3 billion gallons per year of ethanol 

capacity are expected to be operational within the next year.

7 

Ethanol plants currently operate in 19 states, although production remains predominantly 

in the Midwest. Producers manufacture ethanol by processing and fermenting corn or other 

starchy grains.8 Most current ethanol production and new plants under construction use a dry 

milling process, which yields as co-products carbon dioxide and a feed ingredient called distillers 

grain. The alternative wet milling process yields ethanol and a range of different co-products 

that can include corn oil and corn gluten meal. From the plant, producers and marketers 

4 Compare EIA-819 Monthly Oxygenate Report (Dec. 2004), available at 

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/monthly_oxygenate_report/hist 

orical/2005/2005_02/pdf/819mhilt.pdf, with EIA 819-M Monthly Oxygenate Telephone Report 

(Dec. 2000), available at 

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/monthly_oxygenate_report/hist 

orical/2001/2001_01/pdf/819mhilt.pdf. 

5 See Renewable Fuels Ass’n, Homegrown for the Homeland: Ethanol Industry Outlook 2005, at 

8-9, available at http://www.ethanolrfa.org/outlook2005.pdf. 

6 See Renewable Fuels Ass’n, Ethanol Industry Outlook 2001, at 12-13. 

7 See Renewable Fuels Ass’n, U.S. Fuel Ethanol Production Capacity, at 

http://www.ethanolrfa.org/eth_prod_fac.html (last updated Sept. 2005). 

8

 A small amount of domestic ethanol production is produced from waste products, such as 

brewery waste, beverage waste, and cheese whey. Outside the United States, a large amount of 

ethanol is produced from sugar. 

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transport ethanol by rail or truck to product terminals, where they blend it with gasoline for 

further downstream sale. 

Several factors account for the recent increase in ethanol production and demand. First, 

given current government subsidies, U.S. ethanol production can serve as an economical means 

of extending gasoline volumes. For example, firms can produce a blend of 90 percent gasoline 

and 10 percent ethanol by volume (“E-10") for use in automobiles, and sell E-10 at a price 

comparable to gasoline without ethanol. The price of ethanol itself reflects this fact, as spot 

ethanol prices appear more closely related to gasoline prices than to the price of corn or other 

inputs. Thus, rising gasoline prices have helped stimulate ethanol production and demand. 

Second, ethanol has gained acceptance as a replacement for methyl tertiary butyl ether 

(“MTBE”) as the preferred oxygenate in many markets that require reformulated or oxygenated 

gasoline. The 1990 Clean Air Act Amendments require the sale of oxygenated gasoline in areas 

that fail to meet certain air quality standards. Although MTBE remains a common oxygenate in 

some of those areas, environmental liability concerns regarding MTBE’s storage and handling 

have led some oil companies to switch to ethanol use. In addition, several large states (such as 

California and New York, with additional states planning to follow) have banned the use of 

MTBE, leading to increased ethanol use. 

Third, other laws and subsidies also have encouraged expansion of ethanol production. 

State government programs facilitated efforts to build ethanol plants. Federal tax credits created 

incentives for refiners and gasoline blenders to use ethanol. Most recently, the Energy Policy 

Act of 2005 instructs the Environmental Protection Agency to issue regulations that require a 

certain volume of renewable fuel to be included within the gasoline supply. For example, in 

2006, the statute requires that gasoline sold or introduced into U.S. commerce by refiners, 

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blenders, and importers must contain 4 billion gallons of renewable fuel, such as ethanol or 

biodiesel. The volume requirement increases annually, reaching 7.5 billion gallons by 2012. 

Although ethanol sales will likely exceed these requirements in the short term, the Energy Policy 

Act’s guarantee of certain renewable fuel sales provides additional incentives for producers to 

build new ethanol production capacity. 

II. Measuring Concentration Using Capacity 

The Energy Policy Act requires the Commission to analyze ethanol production using the 

HHI measurement of market concentration. The HHI is a tool that the Commission and the 

Department of Justice use in reviewing the competitive effects of mergers. The HHI is 

calculated by summing the squares of the individual market shares of all market participants.9 

The Horizontal Merger Guidelines divide market concentration levels into three categories: 

markets are “unconcentrated” (HHI below 1000), “moderately concentrated” (HHI between 1000 

and 1800), or “highly concentrated” (HHI over 1800).10 The HHI provides a snapshot of market 

concentration and, in the context of merger review, the change in the HHI helps the agencies to 

evaluate the merger’s effect on market concentration. It must be emphasized, however, that the 

Commission does not make enforcement decisions based solely on market share or HHIs. The 

HHI is only the starting point for competitive analysis. Its analytical significance depends on 

other market factors, such as ease of entry and likely competitive effects, that require further 

factual investigation and market analysis. 

9

 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]. The HHI 

ranges from 10,000 (pure monopoly) to a number approaching 0. 

10 See Horizontal Merger Guidelines § 1.5. 

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This analysis begins with the assumption, implicit in the Energy Policy Act’s study 

requirement, that U.S. fuel ethanol production is a distinct relevant market for antitrust purposes. 

A relevant market has product and geographic dimensions. For the purpose of market definition, 

we delineate the product market to be a product or group of products such that a hypothetical 

firm that was the only seller of those products would find it profitable to impose at least a small 

but significant and nontransitory increase in price above the competitive level. A product or 

group of products would not be a product market if such a price increase would not be profitable 

because of the resulting loss of sales to other products. As long as fuel ethanol production is 

above the minimum levels mandated by the renewable fuels standard in the Energy Policy Act, 

there is a strong argument that ethanol is not a proper product market. Ethanol consumption 

above the mandatory minimum levels likely competes with other blendstocks that could possibly 

be used in gasoline. As the price of ethanol increases, refiners and blenders could choose to use 

other blendstocks in their gasoline. In areas with E-85, a blend of gasoline that is 85 percent 

ethanol, owners of flexible fuel vehicles will regularly make the decision to purchase E-85 or 

gasoline with no more than 10 percent ethanol. Compared to refinery capacity, ethanol capacity 

is minuscule. If ethanol is part of the overall gasoline product market, or even a smaller set of 

clean-burning blendstocks, the HHIs presented in this analysis could vastly overstate the 

concentration of the actual product market and the potential of ethanol sellers alone to engage 

profitably in anticompetitive behavior.11 

11 Similarly, the HHIs do not account for the possibility that, in the event fuel ethanol prices 

increase, producers may switch production from other ethanol grades. In addition to fuel 

ethanol, some producers may manufacture beverage-grade ethanol (for alcoholic beverages) or 

industrial-grade ethanol (for industrial and consumer products, such as window-cleaning fluid). 

Volumes of beverage and industrial ethanol remain quite small in relation to fuel ethanol, and 

staff could not determine whether producers would switch grades if fuel ethanol prices rose. 

While staff does not believe significant volumes can be switched in this way, staff’s analysis 

again tends to overstate concentration by assuming that such supply responses would not occur. 

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This analysis also is based on the assumption that the geographic market is the United 

States.12 However, to the extent staff did not account for the effect of imported ethanol, the 

HHIs again overstate concentration in the industry. Many Western Hemisphere countries 

produce ethanol, and over 140 million gallons were imported into the United States in 2004. 

Imported volumes vary according to ethanol prices, and while imports are a small share of U.S. 

production, imported ethanol may become more significant in the event of a U.S. ethanol price 

increase. The federal tariff does not always make foreign ethanol uneconomic to import, because 

the Caribbean Basin Initiative, CAFTA, NAFTA, and other free trade agreements may affect the 

tariff’s applicability. 

Assuming that ethanol constitutes a product market, staff calculated HHIs in several 

different ways. First, staff calculated HHIs based on the ethanol productive capacity of each 

individual producing firm. The results are discussed in this section. Staff also calculated 

capacity-based HHIs that attributed producers’ capacities to their common marketer. Those 

results are discussed in Section III. Finally, staff cross-checked these calculations by 

determining HHIs based on actual production, rather than capacity, the results of which are 

discussed in Section IV. 

Staff first calculated market shares of firms based on their fuel ethanol productive 

capacity. Although market shares may be measured in other ways (such as total dollar sales), 

staff concluded that productive capacity provides a reliable and easily confirmable indicator of a 

producer’s competitive significance in this industry. Because the product is not differentiated 

12 Because marketers supply ethanol to both the East Coast and West Coast from plants in the 

Midwest, there do not appear to be regional markets smaller than the United States. 

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(producers manufacture chemically-identical ethanol), a firm’s capacity likely is the best 

indication of its competitiveness.13 

To determine the productive capacity of each ethanol plant, staff relied upon publicly 

available information supplemented by interviews with industry participants. The Renewable 

Fuels Association (“RFA”) publishes and frequently updates data regarding ethanol capacity and 

announced expansions. Through websites and other sources, many producers also disclose 

existing plant capacity or plans for future construction. Marketers also may announce new 

marketing arrangements with producers. Staff conducted witness interviews of producers, 

marketers, and other industry participants to confirm the accuracy of the public data. 

In attributing capacities to individual producers, staff included additional capacity 

expected to result from new plant construction or expansion of existing facilities, provided that 

the construction or expansion was sufficiently underway that the extra capacity should be able to 

produce marketable volumes within the next year. This is consistent with the approach taken by 

the antitrust enforcement agencies in the Horizontal Merger Guidelines. Staff attributed 

additional capacity to the firm only if the firm had finalized its expansion plans, received 

necessary financing for doing so, and begun the physical construction or expansion. Most 

industry participants believe that producers will likely undertake significant additional capacity 

expansion over the next several years. To the extent that such plans have not yet received 

financing or broken ground, however, future capacity expansions remain too speculative to 

include within this analysis. 

13 See Horizontal Merger Guidelines § 1.41. Because some disparity may exist between a firm’s 

stated and actual capacity, staff also calculated HHIs using actual production data. See Section 

IV below. 

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If each producer is allocated capacity based on this approach, staff determined that the 

HHI for U.S. fuel ethanol capacity would be 499, or “unconcentrated” under the Horizontal 

Merger Guidelines. 

III. Measuring Concentration Using Marketing Agreements 

Marketing agreements add complexity to the competitive analysis of the ethanol industry. 

Producers must find ways to reach oil companies and others that ultimately blend the ethanol 

with gasoline for sale to consumers. A significant number of producers market their own ethanol 

by arranging for truck or rail transport to storage facilities and by entering sale agreements with 

oil companies, blenders, brokers, or others. However, many other producers rely on ethanol 

marketers to make these arrangements, for several reasons. Marketers can amalgamate volumes 

from multiple ethanol facilities to provide major oil companies and other ethanol purchasers with 

a single source for ethanol volumes that exceed what any one ethanol producer can provide. 

Marketers may also negotiate more favorable transportation or storage rates and can broaden the 

geographic reach of a producer’s volumes to enable nationwide distribution. Currently, seven 

major marketers provide these services for third-party ethanol producers. Several smaller 

marketers also provide these services, and other firms have made proposals to enter the ethanol 

marketing business. 

There is no standard marketing agreement in the industry. A typical marketing 

agreement may have a three- to five-year term, though both longer and shorter agreements are 

also common. A marketer may have agreements of different lengths and terms with each of its 

producers. The marketer may be compensated based on a percentage of the dollar sales of 

ethanol or on a flat per-gallon basis. In some circumstances, the marketer may have an equity 

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ownership interest in the producer’s facility. Despite the wide variety of marketing 

arrangements, in virtually all instances the ethanol producer determines its own output level, and 

the marketer is obligated to market 100 percent of the output from the ethanol plant. 

Because marketers often represent more than one producer, staff carefully considered 

whether to attribute capacities to a single ethanol marketer rather than to each individual 

producer represented by the marketer. Each firm’s ability to determine its own output in 

response to changing prices suggested that staff should consider each firm individually. The 

question was complicated by several factors, including the marketers that “pool” the sale and 

distribution of their producers’ ethanol stocks. In pooling relationships, the marketer treats all of 

its producers’ volumes in common, makes sales to accounts, and decides which plant would be 

the best situated to service the account. Each producer is allocated a pro-rated share from the 

common revenue pool, based on the volume it contributes. As a result, each producer within the 

marketing group will receive an identical netback (e.g., the sale price less cost of transportation 

from the ethanol plant), regardless of where its production was actually delivered. The “pool” 

approach contrasts with the other main marketing model, in which the marketer sells its 

producers’ volumes on a plant-specific basis. In the latter type of arrangement, the marketer 

regularly presents sales opportunities to each plant, and the plant’s management must decide 

whether to accept the offer. A small amount of ethanol also is sold through firms acting 

essentially as brokers or resellers that take title to the ethanol and may assume the associated 

price risk. 

Marketing agreements may affect competition in ethanol production in ways that are too 

speculative to resolve in this analysis. For example, because pooling agreements result in a 

customer’s receiving an offer from a single marketer rather than from numerous producers, the 

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pooling agreement may be treated as reducing the number of bidders that could supply the 

customer. In this light, each of the producers’ volumes might be attributed to the common 

marketer that acts as the sole “bidder” in their stead. On the other hand, because marketers have 

no control over a producer’s output decision, a producer may have an incentive to boost 

production in the event of an increase in ethanol prices, and thereby may undercut the pool price 

as the marketer is forced to find additional buyers at potentially lower prices. This suggests that 

even in the pooling context producers might best be considered as independent firms. 

Given the highly fact-specific nature of market analysis, staff cannot determine with 

certainty the effect of each marketing agreement in the industry. Staff therefore calculated HHIs 

by attributing all producers’ shares to their marketer, regardless of whether the marketing 

agreement involves pooling volumes. This approach, which results in the highest level of 

concentration, yields an HHI of 1259, or “moderately concentrated” under the Horizontal Merger 

Guidelines. Staff alternatively calculated HHIs that attributed shares to marketers only when 

they had pooling arrangements with their producers. For producers using non-pooling 

arrangements, we attributed the market shares to the producers themselves. Using this approach, 

staff determined that the HHI was 813, or “unconcentrated” under the Horizontal Merger 

Guidelines. 

IV. Measuring Concentration Using Production 

As stated in § 1.5 of the Horizontal Merger Guidelines, the HHI analysis “suggest[s] 

greater precision than is possible with the available economic tools and information.” Although 

staff believes capacity is a good indicator of concentration in this industry, staff also identified 

limitations on the capacity-based HHI analysis, which are outlined below. Thus, as a means of 

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cross-checking these conclusions, staff also performed an HHI analysis using ethanol production 

data. 

Ethanol plant capacity is difficult to measure with absolute precision. Most industry 

participants report capacity based on “guaranteed” or name-plate capacity. Typically, a builder 

constructs an ethanol plant that is designed or guaranteed to produce a certain volume of ethanol. 

In this industry, the guaranteed amount often falls below the volume the plant can actually 

produce. Moreover, as the producer gains expertise in running the plant, adopts new 

technologies, and improves the production process, the plant’s actual capacity will tend to 

exceed its rated capacity. It is not uncommon for ethanol plants to run 10 to 15 percent higher 

than their stated capacities. 

To test the conclusions of the capacity-based HHI analysis, staff performed a parallel 

analysis using ethanol production data. Every month, EIA collects confidential non-public 

information on production of oxygenates such as ethanol and MTBE. Oxygenate producers with 

production over 8 million gallons must report to EIA their monthly production volumes by 

product. EIA agreed to calculate the HHI data based on annual production from July 2004 

through June 2005, following the same attribution methods outlined above. To maintain its 

confidentiality obligations, EIA reported only the final HHI numbers and did not disclose to us 

the volumes of ethanol attributed to each producer. 

Figure 1 indicates that HHIs based on production are higher than HHIs based on capacity. 

Using the “all producer” model, in which volumes are attributed to each producer, the HHI for 

ethanol production is 929, which is still “unconcentrated.” Using the “all marketer” model, in 

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which producers’ volumes are attributed to their common marketers, the HHI for ethanol 

production is 1613, or “moderately concentrated.”14 

Figure 1: Domestic Fuel Ethanol Concentration 

Treatment of Marketing Agreements 

HHI Based on 

Capacity 

HHI Based on 

Production 

Attribute capacity/production to the producer 499 929 

Attribute capacity/production from members of pool 

marketing agreements to marketer, otherwise 

to producer 

813 1221 

Attribute capacity/production from members of all 

marketing agreements to marketer, otherwise 

to producer 

1259 1613 

Source: RFA, EIA 

Note: Capacity includes new construction and expansions anticipated within one year. 

Production is from July 2004 to June 2005. 

The production-based HHIs in Figure 1 present “worst case” market concentration 

scenarios for each method of treating marketing agreements. Because they are based on 

historical data, the production-based HHIs likely overstate the HHIs that will prevail in the near 

future. Production data do not fully account for entrants that may have begun ethanol production 

sometime during the period measured by EIA. Production data also do not account for capacity 

expansions that will produce marketable volumes within the next year. The ethanol industry is 

growing rapidly, with new entrants lowering concentration over time. The production-based 

HHIs help demonstrate the impact of entry. Indeed, if staff looked at concentration based solely 

on capacity of plants operating at the end of 2004, these figures would be very similar to the EIA 

production-based HHIs.15 

14 If producers’ volumes are attributed only to marketers with pooling agreements, the HHI is 

1221, or “moderately concentrated.” See Section III, supra. 

15 For example, if we attribute all producers’ shares to their marketers, the HHI based on capacity 

was 1634 at the end of 2004, halfway through the period covered by the production calculations. 

This HHI figure is very similar to the HHI based on production (1613) discussed above. 

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V. The Effect of Entry 

The likelihood and magnitude of entry into ethanol production and marketing further 

affect the potential for anticompetitive behavior in the ethanol industry. The threat of 

competitively significant entry can deter anticompetitive conduct by reducing the likelihood that 

one firm (or several firms acting in concert) could profitably raise prices above competitive 

levels. This is consistent with the approach in § 3.0 of the Horizontal Merger Guidelines, which 

instructs that “[a] merger is not likely to create or enhance market power or to facilitate its 

exercise, if entry into the market is so easy that market participants, after the merger, either 

collectively or unilaterally could not profitably maintain a price increase above premerger 

levels.” The Guidelines generally consider relevant only entry that can occur within a two-year 

window from initial planning to significant market impact. 

Entry into ethanol production and marketing has been active and ongoing. Since late 

1998, the number of ethanol producers has grown from 38 to 75. An additional 18 new firms are 

building new plants that should begin production within the next year. These firms collectively 

will add 937 million gallons to annual capacity. Incumbent firms are also expanding capacity, 

both at existing plants and by constructing new plants. As a result of entry and expansion, 

annual productive capacity has increased from 1.7 billion gallons at the end of 1998, to a 

projected 5.5 billion gallons by this time next year. Figure 2 shows the growth in U.S. fuel 

ethanol capacity since late 1998, as well as the impact that this growth has had on industry 

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concentration. 

Figure 2: Historical Fuel Ethanol Capacity and HHIs 

0 

1,000 

2,000 

3,000 

4,000 

5,000 

6,000 

Capacity (Million G

allons per Year) 

0 

500 

1,000 

1,500 

2,000 

2,500 

HerfindahlHirschman Index 

1998 2000 2001 2002 2003 2004 2005 2006(P) 

Capacity (Left Axis) HHI (Right Axis) 

Source: RFA

Note: Annual figures are for year end for 1998 to 2004. 2005 is as of October. 2006(P) is projected capacity

for late 2006, which adds current construction of new plants and expansions.

Facing apparently limited obstacles, new firms can enter into ethanol production at a 

small scale relative to overall ethanol production.16 Designing, planning, and permitting a new 

ethanol plant may be difficult in some circumstances, but most new entrants have completed 

these processes within six to twelve months. Established firms provide design and construction 

services to new entrants, and ethanol’s growth has expanded the availability of capital to finance 

new construction. Typically, a new ethanol plant with a capacity of 50 to 100 million barrels per 

year can produce marketable volumes within roughly one year of groundbreaking. Furthermore, 

16 The minimum viable scale of ethanol plants is small relative to overall domestic fuel ethanol 

production. Firms are constructing ethanol plants with a capacity of around 50 million gallons 

per year, which is roughly one percent of overall capacity. Therefore, a new entrant will likely 

have sales opportunities above its minimum viable scale after any anticompetitive price increase. 

Entry in this scale likely could be absorbed without significantly depressing ethanol prices. 

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a new entrant would not need to rely on current ethanol producers for any of the key inputs for 

building or operating a new plant. 

Barriers to entry at the marketing level appear low as well, as new marketers have entered 

within the past several years and several more seem poised to do so. Entry seems particularly 

likely from former marketers of petroleum products or additives (such as MTBE) that can parlay 

their petroleum industry expertise into ethanol marketing. Some new ethanol plants that market 

their own ethanol production have entered recently as well. 

As an indicator of the risk of anticompetitive conduct in the industry, the HHIs fail to 

account for the ease and rate of entry into ethanol production and marketing. Because it likely 

diminishes the incentives for market participants to engage in certain anticompetitive conduct 

such as cartel pricing, potential entry limits whatever competitive significance one might derive 

from a particular HHI figure. 

VI. Conclusions 

The level of concentration in ethanol production would be unlikely to provide the 

opportunity or incentive for one or more firms to act anticompetitively. Various HHI 

calculations fell into the “unconcentrated” or “moderately concentrated” range, and new entry 

and other market factors reduce the significance of even these figures. Nevertheless, staff cannot 

exclude the possibility that future mergers may raise the potential for anticompetitive effects on 

segments or aspects of the industry. Given the highly fact-intensive nature of merger review, a 

merger may raise issues that warrant further investigation or enforcement action. 

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