FTC Issues Annual Report on Ethanol Market Concentration 2022

"This Report presents the Federal Trade Commission’s (“Commission” or “FTC”) concentration analysis of the ethanol production industry for 2022.1 The report includes certain data and information from the U.S. Energy Information Administration (“EIA”), industry participants, and other sources.2 Section 1501(a)(2) of the Energy Policy Act of 2005 requires that the FTC annually “perform a market concentration analysis of the ethanol production industry . . . to determine whether there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior.”3 Pursuant to the statute, the FTC must measure concentration using the Herfindahl-Hirschman Index (“HHI”) and consider all marketing arrangements among industry participants in preparing its analysis.4 Also pursuant to the statute, the FTC delivers its report to Congress and the Administrator of the Environmental Protection Agency (“EPA”) by December 1 of each year.

The HHI is a measure of market concentration. A given market’s HHI is the sum of the squares of the individual market shares of all market participants.5 As in previous reports, FTC staff (“staff”) analyzed concentration based on U.S. ethanol production capacity and actual production of ethanol. Staff’s analysis does not address whether ethanol production in any geographic area constitutes a relevant antitrust market; instead, it calculates concentration on a nationwide basis, based on ethanol production capacity and actual ethanol production. For both measures, HHIs are calculated for producers and marketers. For both production capacity and actual production, concentration for producer shares is lower than concentration for marketer shares. Based on production capacity, the HHIs are 545 for producer-based shares and 869 for marketer-based shares. Based on actual production, the HHIs are 516 for producer-based shares and 922 for marketer-based shares. HHIs attributed to producers decreased from last year, while HHIs attributed to marketers increased.."
Ethanol