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<p>We examine merger guidelines relying on concentration measures, such as the HHI or its change (delta criterion). We identify under which contexts HHI-based guidelines approve (block) mergers that would have been blocked (approved) according to other criteria, potentially giving rise to false positives (negatives). Overall, we find that competition authorities can rely on easy-to-apply HHI criteria when the merger’s cost-reduction effects are minor, the merger accounts for a small market share, and cost convexities are small. Cost convexities hinder insiders’ ability to exploit their cost advantage to increase their output post-merger, leading to less market concentration than under linear costs, and making HHI-based approvals more likely.</p>

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HHI-based Guidelines and Inefficient Merger Approvals

  • 期刊论文

  • 发表日期：

    2026年2月23日

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  • Felix Munoz-Garcia,
  • Ana Espinola-Arredondo,
  • Eric Dunaway

摘要

We examine merger guidelines relying on concentration measures, such as the HHI or its change (delta criterion). We identify under which contexts HHI-based guidelines approve (block) mergers that would have been blocked (approved) according to other criteria, potentially giving rise to false positives (negatives). Overall, we find that competition authorities can rely on easy-to-apply HHI criteria when the merger’s cost-reduction effects are minor, the merger accounts for a small market share, and cost convexities are small. Cost convexities hinder insiders’ ability to exploit their cost advantage to increase their output post-merger, leading to less market concentration than under linear costs, and making HHI-based approvals more likely.