Two weeks ago, we wrote about the new HSR filing thresholds and fees taking effect February 17. We told you the filing process itself might get harder. Turns out, the opposite happened.
On February 12, a federal judge in Texas struck down the FTC's sweeping overhaul of the merger disclosure form. The expanded form, which tripled the time it took to prepare an HSR filing, is gone. Starting as early as February 20, deal teams can go back to filing the original form that's been in use for 46 years.
If you've got a deal in the pipeline, your filing prep just got dramatically simpler. But the agencies haven't lost their appetite for information, and "easier paperwork" does not mean "less scrutiny."
What Happened
The Rule That Got Killed
In October 2024, the FTC voted 5-0 to adopt the biggest overhaul of HSR filing requirements since the law was enacted in 1978. The new rule took effect February 10, 2025, and required deal teams to submit far more information upfront when notifying the government of a proposed merger.
Here's what the expanded form demanded that the old form didn't:
Strategic rationale narratives. Filers had to describe every strategic rationale for the transaction that was discussed by any officer, director, or employee. Then cite supporting documents. Then explain any discrepancies between the narrative and those documents. It was, to put it mildly, a lot.
Expanded board documents. The old form required certain documents prepared for or shared with the board of directors. The new form expanded this to include drafts shared with even a single board member, plus documents from the "supervisory deal team lead," the person running the deal internally, even if they weren't a director or officer.
Competitive overlap and supply relationship descriptions. New narrative sections required filers to identify horizontal overlaps, including with products still in development, and describe supply chain relationships between the merging parties.
Ordinary course competitive documents. Any plans or reports discussing competition or market shares that were shared with the CEO or board within the past year had to be produced.
The FTC estimated these additions would increase the average filing preparation time from 37 hours to 105 hours. That's roughly $139.3 million in added annual compliance costs across all HSR filers.
The Lawsuit
On January 10, 2025, the U.S. Chamber of Commerce, Business Roundtable, American Investment Council, and Longview (Texas) Chamber of Commerce filed suit in the Eastern District of Texas, arguing the FTC had overstepped its authority.
The case landed before Judge Jeremy D. Kernodle. On February 12, 2026, he granted summary judgment to the challengers and vacated the rule entirely in Chamber of Commerce of the United States v. FTC, No. 6:25-cv-9-JDK (E.D. Tex. Feb. 12, 2026).
The Court's Reasoning
Judge Kernodle found two independent grounds to kill the rule.
The FTC exceeded its statutory authority. Under the Hart-Scott-Rodino Act (15 U.S.C. § 18a), the FTC can only require pre-merger information that is "necessary and appropriate" to determine whether a transaction may violate antitrust laws. The court read that language as requiring a reasonable cost-benefit showing. The FTC didn't make one. The agency tripled compliance costs but couldn't demonstrate the expanded form would actually catch illegal mergers the old form missed.
The most striking line from the opinion: the FTC "could not identify a single illegal merger in the forty-six year history of the prior Form that the Final Rule's new form would have prevented."
Forty-six years. Thousands of mergers reviewed. Not one example where the additional disclosures would have changed the outcome.
The rule was arbitrary and capricious. The court also found the rule violated the Administrative Procedure Act. The FTC failed to explain why less burdensome alternatives, like voluntary information requests during the initial review period or more targeted Second Requests, wouldn't accomplish the same goals. The vast majority of HSR filers, whose transactions required no investigation, bore the full burden of expanded disclosure. All to benefit the small fraction of deals that actually drew agency interest.
The Timeline Right Now
Judge Kernodle stayed his order for seven days to give the FTC time to seek emergency relief. That stay expires today, February 19. On February 17, the FTC filed an emergency motion for a further stay pending appeal and indicated it would file a formal appeal to the Fifth Circuit by February 18.
As of this writing, the Fifth Circuit hasn't publicly ruled on the emergency stay. If the court grants it, the expanded form stays in effect during the appeal. If it doesn't, deal teams can revert to the old form starting February 20.
What It Means
The Immediate Relief Is Real
Under the old form, you file basic transaction information, identify overlaps, and produce a defined set of documents. Thirty-seven hours of work on average. Under the struck-down form, you were writing narratives about deal strategy, producing drafts that any individual board member had seen, and describing competitive dynamics for products that didn't exist yet. Triple the time. Triple the cost.
For a mid-market deal where antitrust risk is minimal, the expanded form was particularly painful. You'd spend weeks assembling documents and drafting narratives that the agencies would likely never read, because the vast majority of filings don't lead to an investigation.
Lighter Paperwork Doesn't Mean Lighter Scrutiny
Here's the counterpoint. The court struck down the FTC's attempt to collect this information upfront from every filer. It didn't limit the agencies' power to ask for the exact same information later.
During the initial 30-day waiting period, FTC and DOJ staff can still make voluntary requests for additional information. If a deal proceeds to a Second Request (the deeper investigation phase), the agencies can demand essentially anything relevant. The strategic rationale documents, competitive analyses, and board materials the FTC wanted upfront? They'll still be requested for any transaction that draws attention.
What changed is the default. Instead of every filer bearing the burden, only the deals that actually concern the agencies will face the deeper dive. That's a fairer allocation of cost and effort. But if your deal is one of the minority that gets scrutinized, prepare for the same questions you would have answered on the expanded form.
The FTC Isn't Done
FTC Chair Andrew Ferguson defended the 2024 overhaul as "long overdue" and a "product of bipartisan consensus." The rule passed 5-0. The agency has filed an appeal. Even if the Fifth Circuit doesn't grant an emergency stay, the appeal itself will take months. And if the appeal fails, the FTC could start a new rulemaking, though that process would take a year or more.
There's also a middle path. Given the court's reasoning, the FTC could craft a narrower rule that passes the cost-benefit test. Maybe one that requires additional disclosures only for transactions above a higher threshold, or only for deals in sectors where the agencies have identified enforcement gaps. A more targeted approach, rather than the all-or-nothing version, might survive judicial review.
The $5.6 Million Reminder
While we're on the subject of HSR compliance: in January 2025, the FTC announced that XCL Resources Holdings, Verdun Oil Company II, and EP Energy would pay a record $5.6 million civil penalty for gun-jumping. The consent order was finalized just this month. That's the highest penalty ever imposed for pre-merger coordination in violation of the HSR Act's waiting period.
The paperwork may get simpler. The rules about what you can and can't do during the review period haven't changed. Maintaining strict separation between buyer and target operations until closing isn't optional. The penalty math is ugly: over $53,000 per day of violation.
How This Changes Deal Negotiations
This ruling changes deal negotiations in ways you might not expect.
Timeline compression. Under the expanded form, parties routinely built in extra weeks for HSR preparation. Purchase agreements included extended periods between signing and filing. If the old form returns, those timelines can shrink. That affects everything from working capital adjustments to break-up fee triggers.
Information sensitivity. The expanded form required disclosing strategic rationale to the government. For competitive deals, particularly in tech and healthcare, sellers worried about sensitive business plans landing in government files. The old form is far less invasive on that front.
Cost allocation. Deal agreements typically address who bears HSR preparation costs. A September 2025 Chamber of Commerce survey found average filing costs nearly doubled under the expanded form, from around $80,000 to $155,000. If you're negotiating a deal now, the cost allocation provision matters less. But make sure it accounts for the possibility that the expanded form could return if the Fifth Circuit grants a stay.
Practical Takeaways
Check the Fifth Circuit before you file. If you're preparing an HSR filing for submission on or after February 20, confirm whether the emergency stay has been granted. If not, you can file the old (simpler) form. If it has, you'll need the expanded version. Prepare for both.
Don't shred your expanded-form prep work. Even if you can file the shorter form, the information you'd have gathered for the expanded version (strategic rationale, competitive analyses, board documents) will likely be requested if your deal draws agency interest. Keep it organized.
Revisit your deal timeline. If your purchase agreement assumed the expanded form's longer prep time, talk to counsel about whether the signing-to-filing window can be shortened. Faster filing means a faster start to the 30-day waiting period.
Update your HSR cost estimates. Legal fees for HSR preparation should drop if the old form applies. Adjust deal budgets accordingly, but build in contingency for the possibility the expanded form returns.
Brief your board. Directors approving deals need to understand the current uncertainty. The disclosure form may change again within months, depending on the appeal. Board minutes should reflect that management is monitoring the situation and has contingency plans.
Plan for state-level filing. California enacted SB 25, joining Washington and Colorado in requiring certain HSR filers to submit copies of federal filings to state authorities. That requirement takes effect January 1, 2027. Even as federal disclosure requirements lighten, state-level requirements are growing.
Maintain gun-jumping discipline. Lighter filing requirements don't change the rules about pre-closing conduct. The $5.6 million XCL/Verdun penalty is fresh. Keep buyer and target operations completely separate until you close. No shared competitive information. No operational integration. No attending the other side's board meetings.
What We're Watching
Fifth Circuit ruling on the emergency stay. A decision could come any day. If the stay is granted, the expanded form remains in effect during the appeal. If denied, the old form applies starting February 20.
Whether the FTC tries a revised rulemaking. The court's opinion gives the agency a roadmap for what went wrong. A narrower rule targeting only high-risk transactions might survive. The process would take 12 months or more.
The gun-jumping penalty update. The current $53,088 daily penalty is expected to increase. The FTC hasn't published the new figure yet.
California SB 25 state premerger notification. Effective January 1, 2027, this will require HSR filers with California nexus to submit copies of federal filings to state authorities. Washington and Colorado already have similar requirements.
FTC Chair Ferguson's next move. Ferguson defended the expanded rule even though a prior administration adopted it. His response to the court loss will signal whether the current FTC prioritizes regulatory expansion or enforcement efficiency.
The Bigger Picture
Federal courts have been pushing back on agency rulemaking that imposes broad costs without demonstrated benefits. This case is another example. The FTC tripled the burden on every merger filer and couldn't point to a single case where the extra information would have mattered.
For deal teams, the takeaway is cautious optimism. The paperwork burden may lighten, at least temporarily. But the agencies' enforcement authority hasn't diminished. The same transactions that would have drawn scrutiny under the expanded form will still draw scrutiny under the old one. The difference is when and how the government asks for the information, not whether it asks at all.
File the simpler form. Prepare for the harder questions. Keep both playbooks ready.