On February 12, 2026, a federal court in Texas threw out a series of sweeping changes to the Hart-Scott-Rodino (HSR) premerger notification system that had been adopted in the closing months of the Biden Administration. The Federal Trade Commission (FTC) promptly appealed this decision to the Fifth Circuit Court of Appeals. However, following a short administrative stay, on March 19, 2026, the Fifth Circuit denied a motion by the FTC to delay the implementation of this order pending appeal. Therefore, while the FTC continues to pursue its appeal, the new HSR rules have officially been invalidated, effective immediately.
The now-invalidated changes had represented the largest shift in premerger notification practice in the nearly fifty-year-old history of the HSR Act. The changes required parties, among many other things, to stake an affirmative position on whether they compete with or supply products to the other side, to explain the strategic rationales for the transaction, to provide additional (sometimes, extensive) business documents, and to prepare English translations of documents written in foreign languages. In invalidating the changes, the lower court held that the FTC failed to show that the changes’ benefits outweighed their significant costs to merging parties, in particular, to the vast majority (historically, 92%) of parties whose transactions require no antitrust investigation whatsoever. Citing language in the HSR Act that authorizes the FTC to impose “necessary and appropriate” notification requirements, the court held that any benefits from requiring additional information must “reasonably outweigh” their costs. The court found, however, that the FTC failed to conduct an adequate cost-benefit analysis to justify sweeping changes to longstanding HSR practice. To the contrary, the court cited an official FTC statement from August 2024 touting that the longstanding HSR system “has been a success” and, at oral argument, counsel for the FTC was unable to identify a single unlawful merger in the history of the HSR Act that the changes would have prevented.
What This Means for Businesses
The invalidation of the HSR changes has major implications for parties to HSR-reportable transactions.
- The court has vacated the HSR overhaul in its entirety. This impacts not only the sweeping revisions that had been made to HSR filing requirements but also technical changes to the HSR regulations, including one regulation that limited the ability of merging parties to make HSR filings based on preliminary letters of intent.
- The court’s order applies to all persons and businesses, across the board. This is important, as the FTC had asked the lower court to limit any relief to apply only to documented members of the particular organizations (e.g., the U.S. Chamber of Commerce) that were named as plaintiffs in the litigation. The court rejected this suggestion, holding instead that the correct remedy was vacating the rules in their entirety.
- By and large, the “old” HSR form will be much, much easier for parties to prepare than the revised form. There are, however, a couple of areas where the “old” HSR form will require information that is not required by the revised form, namely, with respect to the reporting of historical revenue by North American Industry Classification System and North American Product Classification System codes.
- The FTC has indicated that it will continue to accept filings made under the revised HSR form, if parties choose to use the revised form “voluntarily.” In practice, however, we anticipate that the great majority of filers will elect to use the simpler, “old” HSR form.
What This Means for the FTC
The FTC has appealed the court’s ruling to the Fifth Circuit Court of Appeals. If the Fifth Circuit reverses the lower court’s decision, then the “revised” HSR form will go back into effect. This outcome seems unlikely, however, especially after the Fifth Circuit’s refusal to stay the implementation of the lower court’s ruling while the case is appealed.
Barring a reversal of the lower court’s decision by the Fifth Circuit (or, after that, the Supreme Court), the FTC will be left with three options:
- The FTC can accept the court’s decision and abandon the revised rules. This is the path that the FTC took in September, when it “accede[d] to the vacatur” of a Biden-era FTC rule that sought to invalidate employee noncompete agreements.
- The FTC could attempt to re-implement the HSR overhaul after conducting a cost-benefit analysis and reopening the notice-and-comment period. This path could take well over a year, however, and could only succeed if the analysis and notice-and-comment process supported a finding that the overhaul’s benefits reasonably outweigh their costs.
- Alternatively, the FTC might consider a scaled-down version of the HSR revisions, focusing on low-cost changes that the FTC can show to have demonstrable benefits to the antitrust agencies’ law-enforcement missions. Similar to Path 2, this approach would require the FTC to perform a cost-benefit analysis and go through the notice-and-comment process.
On balance, barring a reversal of the lower court’s decision by the Fifth Circuit, we anticipate that the FTC will pursue Path 3 of pursuing scaled-down revisions. Importantly, in 2022, Congress gave the FTC a clear mandate to expand the “old” HSR form to capture information about foreign subsidies that businesses receive from certain foreign governments or entities of concern so, at a minimum, the FTC will need to revise prior HSR practice to reflect this mandate. In addition, we would not be surprised if the FTC seeks to restore certain low-cost changes that were included in the revised rules. Therefore, whatever happens on appeal, it seems quite likely that more changes to HSR practice are likely on the horizon. However, we expect the appellate process and any subsequent rulemaking steps to play out over many months or even years.
