BackMergers and the Herfindahl-Hirschman Index (HHI) definitions
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1/15BackSkip to main contentBackMerger
Combination of two separate firms into a single entity, often impacting market structure and competition. Horizontal Merger
Union of firms within the same industry, typically raising concerns about reduced competition and increased market power. Vertical Merger
Integration of firms at different production stages, usually less scrutinized by regulators due to limited impact on competition. Market Power
Ability of a firm to influence prices and control market outcomes, often heightened by mergers. Competition
Rivalry among firms in a market, which can be diminished by certain types of mergers. Herfindahl-Hirschman Index
Numerical measure of market concentration, calculated by summing squared market shares of all firms in an industry. Market Share
Portion of total industry revenue attributed to a single firm, used in calculating concentration indices. Concentration
Degree to which market power is held by a few firms, assessed using indices like HHI. Monopoly
Market structure where a single firm controls all industry revenue, resulting in maximum market share. Regulatory Response
Government action based on market concentration levels, determining whether mergers are permitted or scrutinized. Low Concentration
Market condition indicated by HHI below 1500, suggesting minimal risk to competition from mergers. Moderate Concentration
Market state reflected by HHI between 1500 and 2500, prompting cautious government review of mergers. High Concentration
Situation where HHI exceeds 2500, leading to heightened regulatory scrutiny of proposed mergers. Industry
Group of firms producing similar products or services, often the focus of merger analysis. Threshold
Specific HHI value used by government to determine the level of concern and action regarding mergers.
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