Antitrust HHI Impact Score

Overview

Analyzes market concentration changes using the Herfindahl-Hirschman Index to forecast the probability of FTC, DOJ, or EU Commission blocking mergers and acquisitions.

What It Does

This pillar aggregates market share data for specific industry sectors involved in a proposed merger. It calculates the pre-merger and post-merger HHI scores to determine the 'Delta'—the specific numeric increase in concentration. It then compares these figures against official Merger Guidelines and historical enforcement thresholds to flag high-risk deals.

Why It Matters

Antitrust regulators rely heavily on HHI thresholds to screen mergers for initial investigation. By replicating this calculation, traders can identify deals that are mathematically destined for regulatory challenge versus those likely to pass, providing a distinct advantage over sentiment-based trading.

How It Works

First, the relevant product and geographic markets are defined based on regulatory filings and competitor analysis. Second, market shares of all competitors are estimated to establish a baseline. Third, the sum of squared market shares is calculated for both the status quo and the pro forma entity to derive the Delta. Finally, this risk score is weighted against the current administration's enforcement aggression.

Methodology

Calculates HHI = Σ(s_i^2) where s_i is the market share percentage of firm i. Focuses primarily on Delta = HHI_post - HHI_pre. Risk thresholds are set based on the 2023 Merger Guidelines: Delta > 100 in moderately concentrated markets (HHI 1500-2500) and Delta > 200 in highly concentrated markets (HHI > 2500). Includes adjustment coefficients for vertical integration concerns.

Edge & Advantage

Provides a quantitative, legalistic basis for prediction that ignores corporate PR spin, aligning your position with the actual mathematical frameworks used by government economists.

Key Indicators

• HHI Delta Score

  high

  The point increase in market concentration post-merger

• Market Definition Scope

  high

  The breadth of the industry definition (narrow vs. broad)

• Pre-Merger HHI Baseline

  medium

  Existing concentration levels before the deal

Data Sources

• SEC Filings (10-K)

  Corporate annual reports for revenue segment data

• FTC/DOJ Merger Guidelines

  Official thresholds for presumption of illegality

• Statista / IBISWorld

  Third-party industry market share estimations

Example Questions This Pillar Answers

• → Will the FTC file a lawsuit to block the Kroger-Albertsons merger?
• → Will the Microsoft-Activision deal close by Q4 2024?
• → Will the EU Commission approve the Adobe-Figma acquisition unconditionally?

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