Federal Court Vacates Expanded HSR Merger Rules, Reinstating Streamlined M&A Framework

For corporate dealmakers and founders eyeing an exit, the upfront cost of selling a company just dropped significantly. The sweeping expansion of the Hart-Scott-Rodino (HSR) premerger notification rules—which had drastically increased the documentation, time, and legal fees required to clear antitrust review—has been struck down.[1][4]

A federal court has vacated the Federal Trade Commission's comprehensive 2024 overhaul of the HSR framework, immediately reinstating the simpler, pre-2025 reporting rules. The decision eases a major regulatory bottleneck for large mergers and acquisitions, allowing companies to file their mandatory premerger notifications using the legacy forms.[1][3]

Under the HSR Act, transactions exceeding a specific monetary threshold—set at $133.9 million for 2026—must be reported to the FTC and the Department of Justice. This triggers a mandatory waiting period, typically 30 days, before the deal can close, giving regulators time to assess potential anticompetitive effects.[4]

The now-vacated rules, which took effect in February 2025, represented the most significant expansion of this process since 1978. They required merging parties to submit extensive narrative descriptions of transaction rationales, translate foreign-language documents, identify lead deal personnel, and produce ordinary-course strategic plans.[1][2]

Previously, such exhaustive documentation was only demanded during later-stage, in-depth investigations known as "Second Requests." By shifting this burden to the initial filing stage, the FTC aimed to better screen for illegal mergers, but business groups argued it functioned as an unwarranted tax on all M&A activity, regardless of competitive risk.[2][4]

Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas ruled that the FTC exceeded its statutory authority. In a lawsuit brought by the U.S. Chamber of Commerce and other industry groups, the court found the rulemaking to be "arbitrary and capricious."[1]

The judge noted that the agency failed to demonstrate that the claimed benefits of the expanded disclosures reasonably outweighed the substantial compliance costs imposed on all filing parties. The court rejected the FTC's argument that the rule would conserve agency resources, pointing out that efficiency gains would only accrue in the roughly eight percent of transactions the FTC actually investigates.[1][2]

The relief for dealmakers is immediate and nationwide. The U.S. Court of Appeals for the Fifth Circuit subsequently denied the FTC's motion to stay the district court's decision pending appeal. As a result, the FTC's Premerger Notification Office confirmed it is accepting filings using the older, less burdensome forms.[1][4]

The Fifth Circuit has since granted a motion to hold the FTC's appeal in abeyance until late 2026, effectively pausing the legal battle and ensuring the streamlined rules remain in place for the foreseeable future. This provides critical certainty for transactions currently being negotiated.[1]

While the immediate regulatory burden has lifted, the long-term landscape remains unsettled. The FTC is reportedly contemplating a new, revised rulemaking process to address the court's cost-benefit concerns while still capturing more upfront data on complex transactions.[1][3]

For now, however, companies can proceed under the familiar, legacy HSR framework. By removing the expanded upfront disclosure requirements, the ruling significantly reduces the friction of getting a transaction to the closing table, marking a substantial procedural victory for the broader business community.[2][4]