Federal District Court In Texas Tosses FTC's 2025 HSR Filing Rules

Editor's note: On February 19, 2026, the Fifth Circuit granted the FTC's request for an administrative stay of a lower court's decision vacating the 2025 rules that expanded the premerger notification filing requirements under the HSR Act. In doing so, the Fifth Circuit ordered the parties to complete briefing on the underlying motion by February 26, 2026, with the stay being effective "until further order of [the] court." Parties planning to submit HSR filings in March should consider preparing them under both regimes.

Executive Summary

• What's new: The Eastern District of Texas vacated the FTC's 2025 rule changes that expanded the premerger notification filing requirements under the HSR Act and took effect just over one year ago.
• Why it matters: The ruling could alter a company's filing requirements until a final determination is reached. Since taking effect on February 10, 2025, the expanded form has added time, cost and complexity to the HSR filing process.
• What to do next: Parties planning to file on or shortly after February 20, 2026, should consider preparing filings under both regimes until either the FTC provides public guidance or any Fifth Circuit decisions are issued.

On February 12, 2026, the U.S. District Court for the Eastern District of Texas vacated the Federal Trade Commission's (FTC's) new rule changes (New Rules) that a year ago expanded the premerger notification filing requirements under the Hart-Scott-Rodino (HSR) Act.

The court stayed its order until February 20, 2026. Accordingly, the New Rules will remain in place for filings that are submitted through February 19. Parties planning to file before February 20 should continue to use the New Rules.

Background

On October 10, 2024, the FTC adopted a set of New Rules relating to the filing requirements for parties that submit prenotification forms under the HSR Act. The New Rules dramatically overhauled the types of data and documents to be submitted, requiring approximately 20 new categories of information and documents, including information about parties' ownership structures, prior transactions, transaction-related drafts and internal competitive analyses.

Since taking effect on February 10, 2025, the expanded form has added time, cost and complexity to the HSR filing process. For example, the FTC estimated that transacting parties would need 105 hours on average to complete the new form — nearly triple that of the prior form's 37-hour average.

One month before the New Rules were scheduled to take effect, the Longview Chamber of Commerce, U.S. Chamber of Commerce, American Investment Council and Business Roundtable filed a lawsuit challenging the New Rules in the Eastern District of Texas.

Over one year later, on February 12, 2026, Judge Jeremy D. Kernodle granted summary judgment for the plaintiffs and vacated the New Rules.

Legal Analysis

The FTC Exceeded Its Statutory Authority Under the HSR Act

The HSR Act authorizes the FTC to require information from transacting parties that is "necessary and appropriate" for the agency to determine if a potential merger violates the antitrust laws.

In its decision, the court agreed with the plaintiffs that the "necessary and appropriate" language serves as a significant constraint on the FTC's authority rather than a grant of broad discretion, as the FTC argued.

The court held that the statute requires the FTC to establish that the New Rules' benefits "reasonably outweigh its costs," a standard the agency failed to meet. Specifically, it found that the FTC failed to provide sufficient evidence that the New Rules' claimed benefits — detection of additional harmful mergers and savings to agency resources — outweighed the nearly triple increase in compliance costs for the filing parties.

The FTC's Rulemaking Was Arbitrary and Capricious Under the APA

The Administrative Procedure Act (APA) mandates that rules promulgated by federal agencies are not "arbitrary and capricious," which courts have interpreted to mean that a rule's benefits must bear a "rational relationship" to its costs. The court found that because the FTC essentially "deemed cost irrelevant" during its rulemaking process, the New Rules were arbitrary and capricious.

Specifically, the court found that the FTC "failed to consider" the overinclusiveness of the New Rules to reportable transactions that do not present significant competitive risks and thus established a presumption that all M&A activity is "inherently dubious," which conflicts with the HSR Act's mandates.

Additionally, the court noted that the FTC did not adequately explain why it rejected less burdensome and costly alternatives to the expanded form, highlighting that the existing HSR form had been "highly effective" for decades.

Implications

Although the FTC adopted the New Rules in 2024 with unanimous, bipartisan support, this support was not without reservation. In his statement concurring with their adoption, then-Commissioner (now-Chairman) Andrew Ferguson concluded that the New Rules, though "not perfect," were "plainly authorized by a valid grant of authority from Congress" and a "lawful improvement over the status quo."

Ferguson posited that the New Rules addressed "important shortcomings" in the old form, reasoning that they better reflected modern corporate structures and would help reduce "bureaucratic inertia" in agency investigations.

However, Ferguson also signaled that he would have preferred to have further narrowed the New Rules. For example, he flagged the transaction rationale requirement as redundant, expressing doubt that it would "provide any valuable information" the FTC could not glean elsewhere in the form.

This qualified support suggests that, if the district court's decision is not reversed, the FTC under Chairman Ferguson's leadership may push for new rulemaking on a more limited scale rather than abandon the HSR modernization effort and accept reversion to the prior Form entirely.

Takeaways and Next Steps

• Timeline: The court has stayed its decision for seven days, until February 20, 2026.
• Expected FTC response: The FTC must decide whether to seek an emergency appeal and/or stay of the ruling.
• Interim transactions: The 2025 form remains in place through February 19. Any filers submitting between now and then should use the 2025 form. If a company expects to submit a filing on or after February 20, best practices are to prepare filings under both the New Rules and the old rules in case the Fifth Circuit Court of Appeals grants a stay.
• Updates: We will be closely monitoring any interim guidance from the FTC and will provide updates as needed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.