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11.4. The HP-Compaq merger. In 2001, HP acquired Compaq. The merger had an impact on two
different markets: desktop PCs and servers. Pre-merger market shares in the desktop PC market
were as follows: Dell, 13; Compaq, 12; HP , 8; IBM, 6; Gateway, 4. Pre-merger market shares in
the servers market were as follows: IBM, 26; Compaq, 16; HP. 14; Dell, 730 (a) Determine the
value of HHI in each market before the merger. (b) Assuming market shares of each firm remain
constant, determine the value of HHI after the merger. (c) Considering the values determined
above and the DoJ merger guidelines, was the Department of Justice right in allowing the merger
to take place?

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