On February 12, 2026, the U.S. District Court for the Eastern District of Texas vacated the Federal Trade Commission’s (FTC) rule implementing the new HSR Act filing form that took effect on February 10, 2025. For a detailed analysis of the new HSR Act filing form, see our prior blog post. The court stayed its order for seven days to allow the FTC to seek emergency relief from the U.S. Court of Appeals for the Fifth Circuit. The immediate implications of the court’s order thus hinge on whether or not the FTC pursues an appeal.
Key Takeaways:
- The new HSR form remains in place at least through February 19.
- If the FTC elects not to appeal and the district court’s order takes effect, then the former HSR form would apply again. Parties should largely be able to utilize the information collected for the new HSR form to complete the old HSR form if they needed to revert to the old HSR form.
- The district court’s order only affects the HSR filing form and has no bearing on whether a transaction is subject to the HSR Act reporting requirement or thresholds.
The District Court’s Order
The district court’s order rested on two independent findings: (1) that the FTC exceeded its statutory authority in enacting the new HSR form; and (2) that the new HSR form is arbitrary and capricious, violating the Administrative Procedures Act (APA).
First, the district court found that the FTC's rule exceeded its statutory authority under the HSR Act because the agency failed to show that the rule’s claimed benefits outweigh the associated burden. The HSR Act mandates that premerger notifications be “necessary and appropriate” to enable the agencies to determine potential antitrust violations. The court interpreted this to mean that the benefits of the rule must “reasonably outweigh” its costs, emphasizing that “no regulation is appropriate if it does significantly more harm than good.” The court noted that the FTC’s own estimates of the time required to complete the new form would nearly triple, from an average of 37 hours to 105 hours. This consequently caused an estimated additional burden of approximately $139.3 million annually across all HSR filings. Considering the already significant costs imposed on filers, including the 92% of HSR-reported mergers that do not warrant further investigation, the court held that the FTC failed to demonstrate that the rule’s claimed benefits—bolstering detection of harmful mergers or preserving agency resources—were sufficiently substantiated to justify the burden. The court noted that the FTC failed to identify a single illegal merger in the former HSR form’s 46-year history that would have been prevented by the new form. The court thus found that the FTC exceeded its statutory authority.
Second, the district court found that the FTC’s rule was arbitrary and capricious because it claimed the benefits did not bear a rational relationship to the costs. The court deemed the FTC’s rejection of less burdensome alternatives, such as voluntary requests or more targeted Second Requests, to be improperly reasoned. Further, the court found that the FTC failed to adequately substantiate its claims about information deficiencies in the old form or explain why the proposed alternatives (such as more targeted Second Requests or voluntary submissions) were more costly than tripling the time and costs of every HSR-reportable transaction for all filers.
Next Steps
Even though the FTC has defended the new rule throughout President Trump’s second term, an appeal to the Fifth Circuit is not a foregone conclusion. The FTC voted out the new rule unanimously in October 2024 when Democratic commissioners held a majority. The Republican minority, consisting of former Commissioner Holyoak and then-Commissioner Ferguson, voted in favor of the rule, but not without reservations. At the time, then-Commissioner Ferguson characterized the new rule as an “improvement over the status quo” and noted that he would have written the rule differently had he been the “lone decision maker.” He also disagreed specifically with the new requirement that parties state the strategic rationale for entering into the transaction and emphasized that the Commission “should abandon whatever parts of the Final Rule do not work.” Given the amount of time and resources it took to issue the final rulemaking (more than fifteen months from start to finish), if the district court’s decision stands, it will remain to be seen whether the FTC will try to re-implement any features of the new HSR form that it deems worthwhile. We can be certain, however, that should the new rule remain overturned, the FTC will have to update the pre-2025 HSR form to add in a section on foreign subsidies (as required by the Merger Filing Fee Modernization Act of 2022, enacted as part of the Consolidated Appropriations Act of 2023).
