The New Merger Guidelines and the Herfindahl-Hirschman Index

Abstract

stated purpose of the new Guidelines is to "describe the general principles and specific standards normally used by the Department in analyzing mergers," 6 it is not surprising that the HHI has been incorporated into the Guidelines.Of course, the Guidelines' drafters aspire to more than a descriptive role. 7 The 1968 Merger Guidelines 8 had an important influence on successor administrations, 9 courts,' 0 the Federal Trade Commission, commentators and students,' 2 and firms contemplating mergers and their counsel.Presumably its drafters anticipate that the new Guidelines will make a comparable impact, and that the HHI will gain general recognition as the preferred measure of concentration.This Article begins by describing the HHI, its principal properties, and its use in the Guidelines, the literature, and the case law.It then evaluates the advantages of the HHI as compared to CR's, the measure of concentration used in the 1968 Guidelines.1 3 Finally, it considers the practical consequences of changing to the HHI, and the wisdom of this change.This Article concludes that use of the HHI in the new Guidelines probably will change few prosecutorial or adjudicatory decisions about mergers except as part of a larger process of instilling in the Antitrust Division staff, and perhaps tribunals and successor administrations, a more lenient attitude toward mergers than formerly 6.U.S.

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