A measure of market concentration levels that takes into account the number, relative size, and distribution of competitors in a market. The HHI is calculated by summing the squares of the market shares of each market participant. For example, a market with four competitors with market shares of 40%, 25%, 20%, and 15% would have an HHI of 2,850 (1600 + 625 + 400 + 225).

In reviewing a merger, the antitrust authorities in the US and certain other jurisdictions compare pre-merger and post-merger HHI calculations to help determine the likely anti-competitive effects of the deal. For more information, see Practice Note, How Antitrust Agencies Analyze M&A.