In assessing M&A transactions, the correct setting of the boundaries of the relevant market has become essential. Without this factor, it is impossible to make reasonable conclusions about the increase in the share of companies of the market, as well as about the dynamics of market power. In order to apply the merger Directives, the United States Supreme Court has prepared a special list of criteria designed to define the boundaries of "economic markets". Along with the well-known indicators of cross-price elasticity of demand, the list included parameters reflecting the fact of public recognition of the existence of the relevant market. Among the important indicators there was the presence of special characteristics of the products, the uniqueness of production capacity, the formation of a special group of buyers, the presence of specialized sales channels, the degree of sensitivity to price fluctuations and a number of others.
The next task of the state authorities, as well as the consultants preparing the transactions, was to find out whether the proposed transaction would lead to a significant increase in the level of concentration in the market (and, as a consequence, to the strengthening of market power). The Herfindahl–Hirschman Index (HHI), which is still used today, has been used to estimate the concentration level when the following rules are introduced. If the HHI value after the merger is below 1000, the transaction is not of interest to regulators. The transaction should be the subject of regulatory attention with HHI between 1000 and 1800, and if the merger increases the index by more than 100 units. If the value of HHI after the merger exceeds the level of 1800, and its value as a result of this transaction increased by 50 units or more, then this situation should also be of interest to regulators. Also if HHI as a result of the transaction increases by more than 100 points, the M&A transaction is usually prohibited. In addition to these parameters, it was considered appropriate to take into account the degree of freedom of entry into the market of highly concentrated industries, in which the conduct of M&A transactions is under the control of U.S regulators (Carlton, 2005, p. 647).
In general, in the 1990s, which accounted for the fifth wave of M&A transactions in the United States, a number of new trends were clearly manifested, which were reflected in the policy of regulating these processes. The general background for them was created by the processes of globalization of food, service and capital markets, the formation of international integration groups (the EU, NAFTA, etc.), the formation of the WTO, which resulted in a significant reduction in trade barriers and capital mobility and increased opportunities for corporate growth. As a result of the amendments to the legislation, a significant number of transactions, including the largest ones, in a number of leading sectors of the American economy were approved, which led to a significant increase in the level of their concentration (Sudarsanam, 2003, p. 19).
In parallel with these processes, there have been changes in the procedures for the implementation of antitrust policy. There has also been a further development of very sophisticated tools and empirical methods that have been used, inter alia, to justify possible scenarios for the development of the market situation in the industry after M&A transactions. For this purpose, simulation and econometric methods have been actively used, which, as will be shown below, is typical for the EU. Also, additional conditions for the approval of M&A transactions were introduced and applied in practice. As the first of these, the antitrust authorities began to use a special procedure, which usually consisted of offering to sell part of the assets of the company involved in the transaction to a third firm with the purpose to support competitive pressure in the relevant market. The second condition is the application of a special procedure for imposing behavioral restrictions on M&A firms involved in transactions, with strict monitoring of agreed requirements by companies. To improve the objectivity of their conclusions, regulators can also refer to the assessments of competing firms or other persons who are not initially interested in the transaction or are in opposition to it (Pepall, 2014, p. 414-422).
Another noteworthy trend in recent years has been the increasing importance of companies documenting cost savings as a condition for the approval of horizontal transactions. At the same time, public authorities began to treat the fact of saving costs as a sufficient basis for assessing transaction that is not violating competition, especially if these savings are likely to cause a decrease in prices for consumers.