New HSR Rule Struck Down and Vacated

On Thursday, February 12, 2026, a federal district court in Texas vacated the Federal Trade Commission new Hart-Scott-Rodino (HSR) rule. As explained in a previous alert, the Federal Trade Commission (FTC) recently revamped its premerger notification program under its new HSR rule, which went into effect on February 10, 2025.

Last week, Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas found that the new HSR rule exceeds the FTC’s statutory authority because the agency has not shown that the rule’s benefits will “reasonably outweigh” its “significant and widespread” costs. The court also held that the new rule is arbitrary and capricious for largely the same reason. Accordingly, the court vacated and set aside the new HSR rule. The court’s universal vacatur is stayed seven days to allow the FTC an opportunity to seek emergency relief from the Fifth Circuit. Through its official account on X, the agency has advised filing parties to continue to use the new form until February 19, 2026, after which the FTC is expected to provide more guidance.

The Previous Premerger Notification Form

The Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), passed in 1976, requires firms to notify the FTC and Department of Justice (DOJ) before consummating mergers or acquisitions that meet certain size thresholds, allowing the antitrust enforcement agencies to review, investigate, and sue to block transactions. In 1978, the FTC published the first premerger notification form. This form governed mergers and acquisitions for nearly 50 years.

In 2023, the FTC proposed changes to the form that would expand the categories of information that parties needed to disclose. Subsequently, the FTC received hundreds of comments to withdraw or rewrite the proposed rule. In October 2024, the FTC announced its unanimous vote to implement a new HSR form under a new rule set to take effect on February 10, 2025. The final rule received bipartisan support as it pared back some of the controversial provisions set forth in the initial proposal.

The rule requires approximately 20 new categories of information and documents including:

• Identification of certain overlapping officers and directors
• Competition documents from supervisory deal team leads
• Description of competing products or services
• Supply relationship descriptions
• Transaction rationale

A month before the new rule took effect, certain business groups, including the Chamber of Commerce of the United States, challenged the FTC’s statutory authority under the Administrative Procedure Act (APA) in a federal district court in Texas.

The Lawsuit

The FTC receives its authority for the HSR rule from Section 18(a) of the HSR Act. This provision states that the FTC “shall require that the [premerger] notification . . . be in such form and contain such documentary material and information relevant to a proposed acquisition as is necessary and appropriate to enable the [FTC and DOJ] to determine whether such acquisition may, if consummated, violate the antitrust laws.” 15 U.S.C. § 18a(d)(1) (emphasis added). Additionally, the statute permits the FTC and DOJ to “define the terms used in this section,” “exempt from the requirements of this section [those mergers] which are not likely to violate the antitrust laws,” and “prescribe such other rules as may be necessary and appropriate to carry out the purposes of this section.” 15 U.S.C. § 18a(d)(2)(A)–(C) (emphasis added).

The APA requires courts to “hold unlawful and set aside agency action . . . found to be . . . in excess of statutory jurisdiction, authority, or limitations.” 5 U.S.C. § 706(2)(C). To determine whether the FTC exceeded its statutory authority, the court analyzed whether the new HSR rule is “necessary and appropriate.” The court concluded that the new HSR rule fails to satisfy the statutory requirement of the HSR Act because the benefits of the new HSR rule do not reasonably outweigh its costs. In coming to this conclusion, the court weighed the following costs and benefits:

The Costs

• The costs to comply with the new rule are roughly triple the costs to comply with the old form. The prior form took an average of 37 hours to complete, while the new form is estimated to require 105 hours.

The Benefits

• Detecting additional harmful mergers; and
• Saving the FTC time and costs of obtaining more information during the premerger screening process

Ultimately, the court was unpersuaded by the FTC’s arguments and held that the purported benefits are “illusory or, at least, unsubstantiated.” The court also held that the HSR rule is the product of arbitrary and capricious rulemaking in violation of the APA. Plaintiffs succeeded under this argument for many of the reasons explained above. The FTC “failed to demonstrate that it would obtain meaningful benefits” from the new form. The court held that the FTC failed to show that the claimed benefit of saving time and resources reasonably outweighs the new rule’s significant costs.

The Remedy

Plaintiffs sought “universal vacatur” of the HSR rule. Universal vacatur differs from injunctive relief because it sets aside the rule entirely. The FTC argued that the new HSR rule is “ill-suited for universal relief” because “hundreds of parties have already sought premerger review . . . using the new form.” Additionally, the FTC requested that any vacatur be limited to “members of the plaintiff associations who have demonstrated that they have standing.” Ultimately, the court sided with plaintiffs and held that vacatur is the only statutorily prescribed remedy for a successful APA challenge and acknowledged that the Fifth Circuit “has repeatedly rejected government efforts to limit relief to the parties and has upheld universal vacatur as the appropriate remedy in APA cases.” The district court vacated and set aside the rule. The order is stayed for seven days to allow the FTC an opportunity to seek emergency relief from the U.S. Court of Appeals for the Fifth Circuit.

The Effects of Decision

The immediate impact of this decision remains uncertain. The FTC is expected to appeal the decision and seek a stay of the order pending appeal. If a stay is issued by the Court of Appeals, the current HSR rule and form will continue to stay in effect. If the FTC decides not to appeal the court’s decision or if the court rejects the FTC’s request for a stay, the FTC will likely provide guidance to filing parties. If the new HSR rule is set aside, the agency may revert to the old form. Until the dust settles, parties needing to file a premerger notification form will need to navigate some uncertainty. 

Ballard Spahr’s Antitrust and Competition Group, with its robust antitrust compliance and litigation experience, is monitoring the effects of the court’s decision on HSR compliance closely. If you have any questions about how this decision affects a transaction you are considering, please contact any member of the Antitrust and Competition Group.

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