Final answer:
The merger of two firms in a very lowly concentrated market is unlikely to significantly alter competition, as a low four-firm concentration ratio indicates limited concern for diminishing competition.
Step-by-step explanation:
A merger between firms in an industry that has a very low concentration is typically not a cause for concern regarding competition diminishment. When examining the effects of a merger, one approach to assess competitive impact is the concentration ratio, specifically the four-firm concentration ratio. In a market with a low concentration where the top firms do not dominate, such as an industry that is not led by firms ranked in the top four in the market, the merger of two smaller firms is unlikely to significantly alter the market's competition.
For example, if two of the smallest firms in an industry with very low concentration merged, this would not change the four-firm concentration ratio, hence competition is largely unaffected. This is opposed to a scenario where the largest firms merge, which would increase the four-firm concentration ratio and could possibly trigger antitrust scrutiny depending on the new level of market concentration. The concentration ratio serves as a gauge for regulators to decide if mergers pose a threat to competitive balance within a market.