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After an eventful week, bipartisan changes to Hart-Scott-Rodino Act ("HSR Act") premerger notification rules finalized in October 2024 will remain in effect until the Fifth Circuit issues a decision on a stay pending appeal. The rules have been in effect since February 2025. Transacting parties should plan to continue to use the new rules in the short term, but the applicability of the rules going forward is still to be determined by the Fifth Circuit. A summary of the rule changes and state of play is below.
2024 Changes to the HSR Rules
After much buildup, in October of 2024, the FTC voted unanimously to issue a final rule enacting changes to the HSR premerger notification rules. This represented the first major change to HSR reporting requirements since the HSR Act was passed in 1976.
The final rule did not alter substantive antitrust law, but instead made changes to the types of information transacting parties have to include in their HSR premerger notifications. Widely critiqued by business, but supported by antitrust officials in both parties, the changes increased the burden on transacting parties by expanding the information they had to provide to the government. Such information now to be provided includes:
- Additional transaction-related documents and documents about the industry at issue, including competition therein;
- Narrative descriptions about:
- Transaction rationale;
- Products and services sold by each party, including any that overlap; and
- Top 10 customers for overlapping products or services;
- Information about supply relationships between the parties; and
- Listings of the buyer's officers, directors, and investors under certain circumstances.
Legal Challenges
On January 10, 2025, one month before the changes were to take effect, the US Chamber of Commerce and other organizations sued the FTC in the Eastern District of Texas alleging the Final Rule violated the Administrative Procedure Act ("APA") and seeking to nullify the final rule as in excess of the FTC's statutory authority and as arbitrary and capricious.
Despite the lawsuit and the change in administration, the changes went into effect on February 10, 2025 and transacting parties have been submitting this additional information for the last year. The FTC continued to defend the lawsuit under Chair Andrew Ferguson.
On February 12, 2026, a judge in the Eastern District of Texas vacated the rule change, finding that: (1) it conflicts with unambiguous terms of the HSR Act; and (2) it is the product of arbitrary and capricious decision-making. The judge stayed the order for seven days, until February 19, 2026, to allow the FTC to appeal. At nearly the end of that period, on February 17, the FTC requested the District Court keep the HSR changes in effect while the FTC appeals the decision to the Fifth Circuit. The District Court declined to do so the next day.
On February 18, hours after the District Court declined to issue a stay pending appeal, the FTC filed a motion in the Fifth Circuit seeking an administrative stay of the order vacating the rules until March 2, 2026 and a stay pending appeal. The administrative stay would give the Fifth Circuit about 10 days to decide whether the order vacating the rules should be stayed while the appeal is pending, a decision that will dictate what rules will govern the HSR filings for the next several months. Plaintiffs opposed the motion for a stay pending appeal, but did not oppose the request for an administrative stay. On February 19, hours before the rules were set to be vacated, the Fifth Circuit issued an administrative stay of the order vacating the rules until further order of the court. The Fifth Circuit has not yet issued an order on the stay pending appeal.
What's Next?
Over the next few weeks, the Fifth Circuit will decide whether the rule will remain in effect while the FTC appeals the District Court's decision that vacated the order. Regardless of whether there is a stay pending appeal, the Fifth Circuit will hear the merits of the FTC's appeal and decide whether to affirm the District Court's finding that the rule should be vacated. Transacting parties should continue to monitor the status of the rules as the case moves through litigation.
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