Department has said it would challenge proposed mergers with a postmerger HHI between 1,000 and 1,800 if the index increased by more than 100 points Industries with an index greater than 1,800 are deemed highly concentrated, and the Justice Department has said it would seek to block mergers in these industries if the postmerger index would increase by 50 points or more Table 16.1 "The Herfindahl-Hirschman Index and Antitrust Policy" summarizes the use of the HHI by the Justice Department Table 16.1 The Herfindahl-Hirschman Index and Antitrust Policy If the postmerger HerfindahlHirschman Index is found to be… then the Justice Department will likely take the following action Unconcentrated (1,800) Challenge if postmerger index changes by more than 50 points The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have adopted the following guidelines for merger policy based on the Herfindahl-Hirschman Index U.S Department of Justice and Federal Trade Commission, 1992 Horizontal Merger Guidelines, issued April 2, 1992, revised April 8, 1997 One difficulty with the use of the HHI is that its value depends on the definition of the market With a sufficiently narrow definition of the market, even a highly competitive market could have an HHI close to the value for a monopoly The late George Stigler commented on the difficulty in a fanciful discussion of the definition of the relevant market for cameras: Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 849