Client Alert: Federal Court Vacates The FTC’s New Premerger Filing Rule

A coalition of business associations, led by the U.S. Chamber of Commerce, secured a significant victory today against the Federal Trade Commission in the United States District Court for the Eastern District of Texas. The court vacated the FTC’s premerger filing rule adopted in the last Administration, which substantially revised the Hart-Scott-Rodino (“HSR”) Premerger Notification Form and Instructions and imposed significant new burdens on filers. In its decision, the court held that the rule exceeded the FTC’s statutory authority under the HSR Act and was arbitrary and capricious under the Administrative Procedure Act. Specifically, the court found that the FTC failed to demonstrate that the rule’s asserted benefits outweighed its “significant and widespread costs.” The FTC further failed to establish that the new reporting requirements were “necessary and appropriate” to determine whether notified transactions may violate the antitrust laws, as required by the HSR Act.

Rule Garza Howley LLP assisted the Chamber of Commerce in developing its comments to the FTC when the new rule was first proposed under the Biden Administration in 2023. See https://www.uschamber.com/assets/documents/20230927-U.S.-Chamber-HSR-Comments-and-Kothari-Report.pdf. The court’s decision today vacating the rule echoes those original comments and cements the Chamber’s leadership role in ensuring that federal agencies properly account for the costs of regulatory action.

The court stayed its ruling for seven days to permit the FTC to seek emergency relief from the U.S. Court of Appeals for the Fifth Circuit. Absent such relief, the vacated rule will no longer be in effect. We will issue a follow-up client alert in the coming days with a more detailed analysis of the court’s opinion and its implications for HSR practice.