Markets Wired

The market for fuel ethanol in the United States is unconcentrated, with 156 firms nationwide either producing ethanol or likely to begin producing ethanol in the next 12 to 18 months, according to the Federal Trade Commission’s 2013 Report on the State of U.S. Ethanol Production. The lack of market concentration in this industry has been the case each year since the FTC began issuing reports in 2005.

This is the FTC’s ninth annual report on ethanol market concentration. FTC staff calculated market concentration for ethanol production using two different measures of market share – production capacity and actual production. This year’s report concludes that concentration levels in the U.S. ethanol industry are essentially unchanged from last year. The staff also concluded that as of September 2013, there were two more ethanol producers in the United States than at the time of the FTC’s 2012 report on U.S. ethanol production. The largest ethanol producer’s capacity share decreased slightly to 10.9 percent of domestic ethanol production capacity – below the largest producer’s 11.1 percent share in 2012.

The low levels of concentration and the large number of market participants in the U.S. ethanol production industry suggest that the exercise of market power to set prices, or coordination on price or output levels, is unlikely. Staff also concludes that ease of entry and availability of ethanol imports into the United States provide additional constraints on the ability of any group of domestic firms to exercise market power.

The annual reports are required by the Energy Policy Act of 2005. The 2013 report is available on the FTC’s website and as a link to this press release. It was submitted to Congress and the Administrator of the U.S. Environmental Protection Agency, as required by the Act. The Commission vote to issue the report, which was prepared by the staff of the Bureaus of Competition and Economics, was 4-0. (FTC File No. P063000; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.