Federal court vacates HSR overhaul

What just happened – and why it matters

On February 12, 2026, a federal district court judge in Texas struck down the Federal Trade Commission’s (FTC) 2024 overhaul of the Hart-Scott-Rodino (HSR) premerger notification form. The ruling in Chamber of Commerce of the United States of America v. FTC, Case No. 6:25-cv-9-JDK (E.D. Tex. Feb. 12, 2026), vacates in full the Final Rule that substantially increased the burden on M&A filers, requiring many new categories of information and documents beyond what the form previously required. With this, the “original” HSR form is back, at least for seven days from the date of the ruling. The FTC has a week to seek emergency relief from the Fifth Circuit before the court-mandated vacatur kicks in, so stay tuned.

The background: an agency that went too far?

The HSR Act has governed premerger notifications since 1976, requiring parties to deals meeting certain thresholds to file with the FTC and Department of Justice Antitrust Division (DOJ), then wait 30 days (at least) before closing. The purpose of the rule is to give enforcers a window to review potentially anticompetitive transactions without imposing “undue burdens on legitimate merger and acquisition activity.”

Until the 2024 revisions were adopted, the form asked for a relatively circumscribed set of information about the parties and the transaction, including descriptions of the assets or securities being acquired, financial statements, revenue breakdowns, and overlapping product lines, along with a limited set of documents reflecting the parties’ strategic analysis of the transaction. That form, with minor tweaks over the years, remained in place for decades, and the agencies repeatedly touted the program as “highly effective” in identifying potentially anticompetitive transactions for further investigation.

Then came the 2024 overhaul. Citing “profound changes” in corporate structures and competition, the FTC – calling the old form “outdated” – issued a Final Rule adding approximately 20 new categories of required disclosures, including detailed officer and director information, organizational charts, transaction rationale narratives, competition documents from supervisory deal team leads, overlap and supply relationship descriptions, foreign subsidy disclosures, and more.

The FTC estimated the new form would take an average of 105 hours for parties and their counsel to complete – nearly triple the original form’s 37 hours of average preparation time. The FTC likewise estimated that the cost to complete the new form would triple. Business groups estimated the true burden was even higher in many instances.

The court’s reasoning: “necessary and appropriate” means what it says

Judge Jeremy Kernodle’s opinion rests on a straightforward textual analysis: the HSR Act authorizes the FTC to seek documentary material and information that is “necessary and appropriate” to enable the agencies to determine whether a transaction may violate the antitrust laws. Drawing on the Supreme Court’s decision in Michigan v. EPA, 576 U.S. 743 (2015) and the Fifth Circuit’s ruling in Mexican Gulf Fishing Co. v. U.S. Dep’t of Comm., 60 F.4th 956 (5th Cir. 2023), the court held that this language requires, at minimum, that a rule’s benefits “reasonably outweigh” its costs.

The FTC argued that the statute gave it “broad discretion” without requiring a cost–benefit analysis. The court rejected this, finding that the statute’s requirement that the FTC issue rules does not obviate the requirement to consider the burden of compliance in crafting those rules.

 Where the court faulted the FTC’s justifications for the new rule

The court identified two fundamental problems with the agency’s proffered justifications for the form’s overhaul, which included (1) detecting unlawful mergers that would not be caught by the “old” rules, and (2) front-loading more information relating to the deal and the parties to save the agency time and money later in the investigation.

First, the FTC could not identify a single illegal merger in 46 years that its new form would have caught but the old one missed. The agency relied heavily on its own “experience and expertise,” but provided no specifics.

Second, the “resource savings” justification fell short. By the FTC’s own data, roughly 92% of HSR-reported mergers require no investigation or additional requests. Only 8% trigger an investigation, and a mere 3% receive Second Requests.¹ Yet the new rules impose massive additional costs on everyone, including the overwhelming majority of filers whose transactions raise no competitive concerns whatsoever.

The court found the agency’s claimed benefits were either “illusory” or “unsubstantiated,” relying on “vague and conclusory assertions” rather than evidence.

Arbitrary and capricious – and alternatives ignored

The opinion also found that the rule violated the Administrative Procedure Act’s (APA) arbitrary and capricious review standard on independent grounds. The FTC failed to show that benefits “bear a rational relationship” to costs.

Additionally, the agency did not meaningfully consider less burdensome alternatives raised by commenters, such as targeted voluntary requests for information or more focused Second Requests. The FTC’s primary response was that these alternatives would not “address information deficiencies” in the current form – but the agency never substantiated what those deficiencies were.

The court called out a particular logical flaw: the FTC argued that voluntary disclosures and Second Requests are “extremely costly” (citing an American Bar Association estimate of $4.3 million per Second Request), but it failed to explain why imposing those costs on a small subset of filers was somehow worse than substantially increasing costs for all filers.

The remedy: full vacatur

Rejecting the FTC’s request to limit relief to plaintiff associations’ members, the court vacated the rule entirely. In doing so, the court relied on the fact that the Fifth Circuit has consistently held that “[v]acatur is the only statutorily prescribed remedy for a successful APA challenge to a regulation” and is “not party-restricted.” Chamber of Commerce v. FTC, slip op. at 32.

The court found vacatur would not be unduly disruptive because the old form – used successfully for many years – provides a perfectly adequate framework.

What this means for your deals

Immediate practical impact:

• The “original” HSR form may be back in effect after the seven-day stay, subject to the FTC seeking emergency appellate relief within seven days.
• For deals currently in process where the preparation of HSR filings is underway or the parties already have submitted the new form, consult counsel about whether any additional steps are needed. The FTC may issue guidance in the coming days.
• Given the possibility that the Fifth Circuit will reverse the district court, parties planning to file more than a week from the ruling should consider, in an abundance of caution and in consultation with counsel, preparing both a pre-2024 form and a form under the new rules. 

Longer-term implications:

• This decision is part of a broader trend of courts scrutinizing agency rulemaking, requiring agencies to demonstrate that their rules actually are authorized by the enabling statute and supported by statutory text and evidence, not just “experience and expertise.”
• The FTC will almost certainly appeal. It remains to be seen how the Fifth Circuit will react.
• Even if the FTC eventually issues a new rule, this decision establishes clear guardrails: any future HSR form expansion must be backed by concrete evidence that benefits outweigh costs, not just assertions about what “would have been helpful.”

The takeaway

The HSR form overhaul was a signature antitrust project of the Biden administration, and, to the surprise of some, was embraced by the Trump administration. This ruling is a significant setback for the antitrust agencies and is in line with a clear trend by many federal judges, led by the Supreme Court, to reign in what they see as agency overreach and to narrowly construe agencies’ statutory authority to issue regulations. Here, the court was clearly also persuaded that in dramatically expanding the burdens on filing parties, the FTC had abrogated its statutory duty to weigh the benefits of the form’s new requirements against the substantial burden of compliance on filing parties. For M&A parties and practitioners, the decision could mean a return to the familiar. For the FTC, it’s back to the drawing board.

Given the complexity of navigating the new HSR rules and the agencies’ enforcement agenda, it is prudent to involve experienced antitrust counsel early in your deal planning in order to evaluate HSR filing obligations and substantive antitrust considerations for transactions of any size. To learn more about our antitrust capabilities, please contact any of the authors listed below or your usual Reed Smith lawyer.

1. A Second Request is a formal demand by the FTC and DOJ for additional information during the review of a merger or acquisition.

Client Alert 2026-31