(a) The primary advantage of the HHI over the CR4 is that it assigns greater weight to larger companies. While the CR4 takes into account the assets of only four biggest businesses in the sector, HHI takes into account all the companies. Moreover, the calculation of HHI involves taking a square of market shares while CR4 simply uses the shares of the four biggest businesses.

(b) A primary disadvantage of the HHI is that it does not take into account the competition in subsectors. A specific industry may seem to have a small market concentration but at the same time, some firms may have a monopoly for specific types of products. This phenomenon is, however, not considered by the HHI.

(c) The U.S. Justice Department does use the HHI to evaluate merger proposals. This may be due to the fact that the calculation of this index is quite easy and fast. It enables to fasten the process of assessing the market competition after a merger. Also, the interpretation of results is easy; the Justice Department sets specific ranges of scores and takes decisions based on the numeric values obtained from the calculation.