FTC Finds Ethanol Industry Competitive

Cindy Zimmerman

Federal Trade CommissionThe ethanol industry has been exonerated of charges that it is too highly concentrated in the hands of too few companies. Under the Energy Policy Act of 2005, the Federal Trade Commission was required 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 price-setting and other anticompetitive behavior.” I guess that’s because the energy bill provides incentives for increasing ethanol production and they don’t want to give all that money to a small handful of companies. Maybe there were fears by some in Congress that the ethanol industry was just like Big Oil? Anyway, the bottom line of the FTC’s pretty straightforward 17-page report is that “The level of concentration in ethanol production would be unlikely to provide the opportunity or incentive for one or more firms to act anticompetitively.” (Link to full report)