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Herfindahl-Hirschman Index (HHI

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### Industrial Organization & Antitrust Law: The Herfindahl-Hirschman Index (HHI) The Herfindahl-Hirschman Index (HHI) is the primary economic metric used by the U.S. Department of Justice (DOJ) and.

Reviewed by Noman Khan · MBA
Last updated:
Editorial Guidelines

⚙ Input Values

📊 Results

Primary HHI & Antitrust Review Summary
Pre-HHI: 1225 ➔ Post-HHI: 1225 (+0 Δ) | Unconcentrated / Competitive Market
Pre-Merger HHI Index Score (0 - 10,000)
1225 points
Post-Merger HHI Index Score
1225 points
HHI Index Increase (Δ HHI Points)
+0 points (Δ HHI = 2 × s₁ × s₂)
DOJ / FTC Market Concentration Tier
Unconcentrated / Competitive Market (HHI < 1,500)
DOJ / FTC Antitrust Legal Challenge Presumption
SAFE HARBOR: Unconcentrated market (HHI < 1,500); merger is presumed pro-competitive and permitted.
Effective Equal-Sized Competitors (10,000 / HHI)
8.2 pre-merger ➔ 8.2 post-merger
✦ Antitrust Economics & Merger Scrutiny Diagnostic
Antitrust Economic Analysis: The industry pre-merger HHI is 1225 points (equivalent to 8.2 equal-sized competitors across shares [35%]). Merging Firm #1 (35%) and Firm #2 (0%) creates a combined entity of 35.0% market share, increasing the HHI by +0 points (Δ HHI = 2 × 35 × 0) to a post-merger HHI of 1225 points (effective competitors: 8.2). Regulatory classification: Unconcentrated / Competitive Market (HHI < 1,500). Regulatory Verdict: SAFE HARBOR: Unconcentrated market (HHI < 1,500); merger is presumed pro-competitive and permitted.
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📐 Formula

DOJ & FTC Horizontal Merger Guidelines Herfindahl-Hirschman Index (HHI) formulas: -Merger HHI = Σ_i=1^n s_i^2 = s_1^2 + s_2^2 + + s_n^2 -Merger HHI Delta: Δ HHI = (s_1 + s_2)^2 - (s_1^2 + s_2^2) = 2 × s_1 × s_2 -Merger HHI = Pre-Merger HHI + Δ HHI Equal-Sized Competitors = (10,000 ÷ HHI) Concentration Thresholds (DOJ / FTC Standards): - **Unconcentrated**: HHI < 1,500 - **Moderately Concentrated**: 1,500 ≤ HHI ≤ 2,500 - **Highly Concentrated**: HHI > 2,500 (Mergers with Δ HHI > 200 presumed illegal under Section 7 of the Clayton Act).

💡 Practical Example

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For example, an industry with 5 competitors holding market shares of 35%, 25%, 20%, 12%, and 8%: Pre-merger HHI is \. If the top two firms (35% and 25%) merge: \, driving post-merger HHI to \. This creates an extreme Highly Concentrated oligopoly with a strong presumption of antitrust illegality.

📖 About Herfindahl-Hirschman Index (HHI

Industrial Organization & Antitrust Law: The Herfindahl-Hirschman Index (HHI)

The Herfindahl-Hirschman Index (HHI) is the primary economic metric used by the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) to evaluate whether corporate mergers and acquisitions violate antitrust laws.

Why HHI Squares Market Shares

Unlike simple four-firm concentration ratios (CR4), HHI squares each firm's market share percentage before summing. Squaring disproportionately penalizes dominant market leaders to the index, whereas five 10% firms contribute only .

How to Use This Calculator

Enter your Competitor Market Shares (% comma or space separated) (e.g. 35, 25, 20, 12, 8), First Merging Firm (Rank by size: 1 for largest) (e.g. 1 (Firm with 35% share)), and Second Merging Firm (Rank by size: 2 for 2nd largest) (e.g. 2 (Firm with 25% share)). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

DOJ & FTC Horizontal Merger Guidelines Herfindahl-Hirschman Index (HHI) formulas:-Merger HHI = Σ_i=1^n s_i^2 = s_1^2 + s_2^2 + + s_n^2-Merger HHI Delta: Δ HHI = (s_1 + s_2)^2 - (s_1^2 + s_2^2) = 2 × s_1 × s_2-Merger HHI = Pre-Merger HHI + Δ HHI Equal-Sized Competitors = (10,000) / (HHI) Concentration Thresholds (DOJ / FTC Standards):- Unconcentrated: HHI < 1,500- Moderately Concentrated: 1,500 HHI 2,500- Highly Concentrated: HHI > 2,500 (Mergers with Δ HHI > 200 presumed illegal under Section 7 of the Clayton Act).

Worked Example

For example, an industry with 5 competitors holding market shares of 35%, 25%, 20%, 12%, and 8%: Pre-merger HHI is . If the top two firms (35% and 25%) merge: driving post-merger HHI to . This creates an extreme Highly Concentrated oligopoly with a strong presumption of antitrust illegality.

Understanding Your Result

Evaluate your result in the context of your specific use case and relevant industry standards or reference values. A single calculated result is a starting point — test two to three scenarios to understand how sensitive the outcome is to your key input assumptions. For high-stakes decisions, verify your result against a secondary source or subject-matter expert before acting.

💡 Methodological Standards & Calculation Accuracy

  • All calculations are performed client-side in your browser using verified, standards-compliant mathematical algorithms.
  • Results are provided for educational and informational analysis; verify critical applications with certified domain specialists.
  • Ensure input values are entered in consistent units matching the selector options to guarantee accurate outputs.
  • Periodic recalibration is recommended whenever baseline assumptions, operating parameters, or external conditions change.
Sources: NIST Standards · ISO International Standards

Results are for informational and educational purposes only. Always verify critical decisions with a qualified professional.

❓ Frequently Asked Questions

What is the Herfindahl-Hirschman Index (HHI)?
HHI is a statistical measure of market concentration calculated by summing the squared market shares of all firms in an industry. Scores range from near 0 (perfect competition) to 10,000 (pure monopoly).

What HHI score triggers an antitrust investigation?
Under DOJ/FTC Horizontal Merger Guidelines, an HHI above 2,500 denotes a highly concentrated market. Any merger in a highly concentrated market that increases the HHI by more than 100 to 200 points is presumed to reduce competition and faces regulatory challenge.

How do you calculate the delta change in HHI from a merger?
The increase in HHI caused by merging Firm 1 and Firm 2 equals twice the product of their individual market shares: Δ HHI = 2 × s1 × s2.

What is the maximum possible HHI value?
The maximum HHI is 10,000, which occurs in a pure 100% single-firm monopoly.

What is the number of equal-sized competitors equivalent to HHI?
Dividing 10,000 by the HHI yields the theoretical number of equal-sized firms that would produce the same level of market concentration.

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