Court Strikes Down FTC HSR Rules

- The overturned 2025 rules, which took effect in February 2025, dramatically increased the amount of information required in pre-merger filings. New disclosures included detailed narratives on deal rationale, analyses of competitive overlaps and supply relationships, and organizational charts to identify all entities associated with private equity sponsors. - The FTC had estimated the new rules would nearly triple the average filing preparation time, from 37 hours to 105 hours, adding what opponents calculated to be a $139.3 million annual burden on merging companies. For deals with competitive overlaps, the FTC projected the new preparation time could be as high as 121 hours. - The lawsuit was brought by a business coalition led by the U.S. Chamber of Commerce, which argued the FTC had exceeded its authority. - In his February 12, 2026, ruling, Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas found the FTC failed to show that the rule's benefits would "reasonably outweigh" its costs. The court noted the FTC could not point to a single illegal merger in the 46-year history of the prior HSR form that the new, more burdensome form would have prevented. - The court also found the rule to be "arbitrary and capricious" under the Administrative Procedures Act because the FTC did not adequately explain its rejection of less costly alternatives, such as using targeted voluntary information requests. - The ruling does not affect the annually adjusted dollar-value thresholds for HSR filings. For 2025, the minimum size-of-transaction threshold that triggers a filing requirement is $126.4 million. - The FTC has appealed the decision to the U.S. Court of Appeals for the Fifth Circuit. The appellate court has issued a temporary administrative stay, meaning the more stringent 2025 HSR filing rules remain in effect until the court rules on the FTC's request for a longer stay pending the full appeal.