The 2023 Merger Guidelines Explained: HHI Tests and 11 Rules

The 2023 Merger Guidelines, issued jointly by the Federal Trade Commission and the Justice Department on December 18, 2023, describe how the agencies decide whether a merger may substantially lessen competition. A deal is presumed harmful if the post-merger HHI exceeds 1,800 and rises by more than 100 points, or if the merged firm’s share tops 30% with the same HHI increase. As of November 2026 they remain in force.

The guidelines replaced the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines. The full text is on the Justice Department’s site.

What are the merger guidelines, and are they law?

They are not law. The law is section 7 of the Clayton Act, which bars acquisitions whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” The guidelines explain how the two agencies apply that standard when they review deals, so they shape which mergers get a second request and which get challenged in court.

Courts are not bound by them, but they often cite agency guidelines and the concentration thresholds in them when deciding merger cases. The 30% share figure comes from the Supreme Court’s 1963 decision in United States v. Philadelphia National Bank.

How does the HHI concentration test work?

The Herfindahl-Hirschman Index (HHI) is the sum of the squares of each firm’s market share. A market with one firm scores 10,000; five equal firms score 2,000. When firms with shares a and b merge, the HHI rises by 2 × a × b.

Worked example

Say a market has five firms with shares of 30%, 25%, 20%, 15% and 10%. The HHI is 900 + 625 + 400 + 225 + 100 = 2,250, already highly concentrated. If the two smallest merge, the increase is 2 × 15 × 10 = 300, for a post-merger HHI of 2,550. That merger is presumed to lessen competition even though the combined share is only 25%.

The 2023 thresholds are lower than in the 2010 guidelines, which called a market highly concentrated only above 2,500. The agencies said they were returning to the levels used from 1982 until 2010. A presumption can be rebutted with evidence, such as easy entry by new competitors.

What are the 11 guidelines?

Guidelines 1 to 6 set out frameworks for finding harm, and 7 to 11 explain how to apply them in particular situations.

1. Mergers that significantly increase concentration in a highly concentrated market are presumed illegal.
2. Mergers can be illegal when they eliminate substantial competition between the merging firms.
3. Mergers can be illegal when they increase the risk of coordination among the remaining firms.
4. Mergers can be illegal when they eliminate a potential entrant in a concentrated market.
5. Mergers can be illegal when they create a firm that may limit rivals’ access to products or services they need to compete, the main vertical theory.
6. Mergers can be illegal when they entrench or extend a dominant position.
7. A trend toward consolidation in an industry is considered when applying guidelines 1 to 6.
8. When a merger is part of a series of acquisitions, the agencies may examine the whole series, which targets serial “roll-ups.”
9. For multi-sided platforms, the agencies examine competition between platforms, on a platform and to displace a platform.
10. When merging firms compete as buyers, the agencies examine harm to workers, creators and suppliers, which brings labor markets into merger review.
11. Partial ownership and minority stakes are examined for their effect on competition.

Are the 2023 guidelines still in force in 2026?

Yes. On February 18, 2025, FTC Chairman Andrew Ferguson told staff in a memo that the 2023 guidelines are in effect and serve as the framework for the agency’s merger review, as the FTC announced that day. The Justice Department’s Antitrust Division issued a parallel memo, also dated February 18, 2025, saying it would keep using them. Ferguson wrote that the guidelines largely restate prior versions and case law, and left the door open to revisions if experience shows they are needed.

As of November 2026, the agencies have not published a replacement. A separate change, the expanded premerger notification form, was vacated by a federal court in Texas in February 2026; that affects what companies file, not the guidelines. Our guide to Hart-Scott-Rodino filings covers the filing side.

How do the agencies use the guidelines in practice?

Staff apply them during the initial HSR waiting period and in second-request investigations. Complaints filed to block deals typically track the guidelines’ language, citing HHI figures and specific theories such as lost head-to-head competition. Merging companies respond with their own market definitions and evidence, and many cases end with a settlement requiring divestitures or with the deal being abandoned. For the court process, see how the FTC and DOJ block mergers.

What do the guidelines mean for shareholders and employees?

For shareholders of a target, a deal that crosses the presumption thresholds usually takes longer and carries more risk of not closing, which tends to show up as a wider gap between the stock price and the offer price; see why a stock trades below the deal price. For employees, Guideline 10 means the agencies can look at whether a merger reduces competition for workers in a local labor market.

Bottom line

To gauge antitrust risk in a pending deal, look at the merger agreement’s regulatory covenants and any reverse termination fee in the proxy or 8-K, and at whether the parties have received a second request. Those documents show how much risk the companies themselves expect. The guidelines explain the agencies’ approach; a court decides the case.

FAQ

Do the merger guidelines apply to small deals?

They apply to any merger the agencies review, but deals below the HSR size thresholds are usually not reported in advance, so the agencies learn about them only through complaints or later investigation.

What HHI is considered highly concentrated?

Under the 2023 guidelines, a market with an HHI above 1,800 is highly concentrated, and an increase of more than 100 points is significant.

Do the guidelines cover mergers that affect workers?

Yes. Guideline 10 applies the same frameworks to mergers between competing buyers, including employers competing for workers.

Can a merger above the thresholds still be approved?

Yes. The presumption can be rebutted, and many deals close after the companies agree to sell overlapping businesses to a buyer the agencies accept.