The Federal Trade Commission (FTC) has recently publicized its 2023 Report on Ethanol Market Concentration, following a unanimous vote of 3-0 in favor of the report's approval. This report forms part of an annual review process mandated by the Energy Policy Act of 2005, aimed at scrutinizing the state of competition within the ethanol production industry in America.
As per an FTC press release, the purpose behind this regular analysis is to ensure sufficient competitiveness within the ethanol production industry to prevent potential price-fixing and other forms of anticompetitive behaviors as directed by the Energy Policy Act.
The same FTC press release asserts that their 2023 findings indicate a healthy market scenario. They suggest that due to appropriate concentration levels and a substantial count of market participants, it's unlikely for any market power to influence price setting or coordinate pricing or output levels.
As stated in the FTC report, these measures are assessed via Section 1501(a)(2) of the Energy Policy Act. The FTC utilizes tools like Herfindahl-Hirschman Index (HHI), alongside considering all marketing arrangements among industry participants. Furthermore, it's imperative for the FTC to submit this report annually to Congress and Environmental Protection Agency before December 1 as per statutory provisions.
The report adds, "As has been consistent since we started reporting annually, current HHI values show that it is improbable for a single ethanol producer or marketer to monopolize power at a national level. A successful nationwide anticompetitive coordination would necessitate consensus among an enormous number of competitors, making such attempts equally improbable. Moreover, factors such as imports and potential market entry would likely thwart any attempt by domestic firms to exercise undue market influence."
