In brief
The Eastern District of Texas has invalidated the Federal Trade Commission's October 2024 Hart-Scott-Rodino (“HSR”) rule, which substantially expanded the burden on notifying parties. Effective since February 2025, that rule now faces an uncertain future as the Federal Trade Commission (“FTC”) pursues an appeal to the Fifth Circuit. The FTC asked the Fifth Circuit to stay the district court's judgment pending its appeal, which the Fifth Circuit granted “until further order of our court." In addition, the Fifth Circuit set a deadline of February 23, 2026 for the plaintiffs/appellees response brief to the FTC's motion for a stay, and February 26, 2026 for the FTC's reply. Parties intending to submit HSR filings for transactions after February 26, 2026 should remain flexible and potentially prepare notifications using both the current HSR form and the “old” HSR form—unless the Fifth Circuit grants an extended stay and/or further guidance from the FTC.
Key takeaways
- A federal judge for the Eastern District of Texas has vacated the FTC’s HSR rule, which became effective in February 2025, finding that the agency exceeded its statutory authority and failed to justify the rule’s significant costs through a meaningful cost‑benefit analysis.
- The FTC has moved for an emergency stay pending its appeal to the Fifth Circuit, arguing that reverting to the prior HSR form would cause irreparable harm and prevent the FTC from obtaining information it considers essential to conduct its merger reviews.
- The judgment is stayed at least until February 26, 2026. Beyond that date, parties may need to revert to the prior version of the HSR form, creating short‑term uncertainty for filers who may have to prepare both versions of the HSR filing as the litigation continues.
In more detail
The lawsuit against the FTC, which was initiated in January 2025 (prior to the rule's effective date), threatens to dismantle the new HSR rule and the accompanying form.
In October 2024, the FTC issued a final rule that substantially broadened the scope of materials and information required to be included in HSR filings. The rule became effective in February 2025.
On February 12, 2026—about a year after the rule went into effect—the Eastern District of Texas granted summary judgment for the plaintiffs in Chamber of Commerce of the United States of America, et al., v. Federal Trade Commission, striking down the rule.
In its ruling, the Court focused on two independent grounds.
- The FTC failed to justify the expanded rule under the HSR Act’s “necessary and appropriate” standard. More specifically, the FTC failed to substantiate that the benefits claimed by the FTC—improved detection of anticompetitive mergers and savings of agency resources—outweighed the substantial increase in costs imposed on parties to M&A transactions triggering an HSR filing obligation. In issuing the rule, even the FTC acknowledged that the new form nearly tripled the average preparation time burden. The court noted that the FTC could not identify a single transaction that the new rule would have enabled the FTC to detect but had been missed under the prior HSR form.
- The rule was “arbitrary and capricious” under the Administrative Procedures Act, emphasizing that the FTC failed to conduct or meaningfully present a cost‑benefit analysis and did not adequately explain why it rejected less burdensome alternatives.
Following the decision, the FTC filed a notice of appeal with the Fifth Circuit and moved for an emergency stay of the judgment pending its appeal. In its emergency motion, the FTC argued that the expanded disclosures are necessary to address what it described as “outdated and inadequate” aspects of the decades old form. The FTC also argued that merging parties would face significant uncertainty during the appeals process.
The plaintiffs characterized the FTC’s motion as an attempt to relitigate issues the court already rejected and argued that the agency cannot show irreparable harm because it “tried to fix something that was not broken.” Further, the plaintiffs argued that any uncertainty for filers is minor compared with the “substantial” and “unjustified” costs that the now vacated rule would impose if temporarily reinstated. Nevertheless, they consented to a “brief administrative” stay until March 2nd to allow the Fifth Circuit more time to consider the FTC's motion for a stay pending its appeal. The Fifth Circuit officially granted the emergency stay “until further order of our court.” Appellees’ response brief is due February 23, 2026 and Appellants’ reply brief is due February 26, 2026.
Implications
The consequences of a denial of the FTC's request for a stay would be immediate and meaningful. Most notably, filers would no longer face the broad and resource-intensive requirements introduced in the 2025 HSR form. A return to the prior form would substantially lighten this burden, allowing companies to prepare filings faster and at far lower cost.
At the same time, even under the older, simpler framework, the agencies may respond to reduced up front information with more post-filing inquiries, including issuance of voluntary access letters.
Looking ahead, the ruling may trigger the FTC to reconsider the requirements of the 2025 HSR form—whether voluntarily or through judicial compulsion—to modify the form and strike a preferred balance. Despite voting in favor of the HSR rule in October 2024, then Commissioner (now Chair) Andrew Ferguson signaled reservations about the breadth of the proposed changes, indicating that he would have written the rule differently had he been the “lone decision maker.” Specifically, he voiced disagreement with the new requirement that parties disclose the strategic rationale for the transaction and suggested the Commission “should abandon whatever parts of the Final Rule do not work.”
At the same time, in his concurrence, Ferguson observed that the expanded form addressed “important shortcomings” over the prior version, including its failures to reflect modern corporate structures, and that it could help reduce “bureaucratic inertia” in agency investigations.
These statements reveal both an openness to reform and a recognition that aspects of the rule may be unnecessarily burdensome. As such, regardless of the outcome of the FTC's Fifth Circuit appeal, some amendments to whichever version of the HSR filing is enforced may be forthcoming. The court’s emphasis on evidence-based rulemaking will likely shape how any such effort unfolds.
For now, companies should prepare for near-term uncertainty regarding HSR filings. Those with imminent filings should be ready to adapt quickly to the possibility of switching requirements. Deal teams should plan for timing contingencies and consult antitrust counsel early to discuss best practices.
We will be closely monitoring any developments and will provide updates when appropriate.
John J. Fedele, Teisha C. Johnson and Creighton Macy, Partners, have contributed to this legal update.