On 10 February 2025, the Federal Trade Commission’s (FTC) overhaul of the rules implementing the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (HSR) became effective. The new rules now apply to all reportable transactions. As explained in our prior alert, the new HSR rules (Rules) transform the premerger notification process, requiring parties to provide several new categories of documents and information in their filings. For many transactions, the new Rules will significantly increase the cost and time required to prepare HSR filings. While there are several pathways through which the Rules could be challenged, they are likely here to stay for the foreseeable future. This alert discusses the outlook for the new Rules and provides updates on how they are being implemented.
REGULATORY FREEZE ISSUED BY PRESIDENT TRUMP
On 20 January 2025, President Trump issued a regulatory freeze ordering all executive departments and agencies to consider postponing for 60 days the effective date of any final rules that were published in the Federal Register but had not yet taken effect. Similar requests have been made by recent administrations and have usually been followed by the agencies. Here, the FTC commissioners did not vote to toll the effective date of the new Rules, and the Rules went live on 10 February 2025.
WILL THE NEW HSR RULES SURVIVE?
Now that the Rules are live, there are three main pathways through which they could be struck down or modified: (1) agency action, (2) litigation, or (3) an act of Congress. Although it is difficult to predict outcomes as the Trump administration floods the zone, it seems unlikely that the Rules will be nullified through these channels, at least for the foreseeable future.
Agency Action
The FTC commissioners could vote to rescind or modify the new Rules, then go through a lengthy, formal rulemaking process to change them. This seems unlikely for several reasons.
- First, the FTC approved the final Rules by a unanimous, bipartisan 5-0 vote, following efforts to address concerns from the Republican commissioners and commenters to the proposed rules NPRM. In a concurring statement accompanying the announcement of the final Rules, Republican Commissioner (and current FTC Chair) Andrew Ferguson called the Rules “a lawful improvement over the status quo,” adding that while “[t]he Final Rule is not perfect, nor is it the rule I would have written if the decision were mine alone … it addresses important shortcomings … and is ‘necessary and appropriate’ to enable the Antitrust Agencies to determine whether proposed mergers may violate the antitrust laws.” Voting to rescind or significantly alter the Rules would involve backtracking on such public statements.
- Second, on 11 February 2025, Chair Ferguson took to social media to give a resounding endorsement of the new Rules, noting on X that “updates were long overdue,” and that the new Rules are a “win-win” that will “ensure that parties provide the appropriate information so law enforcement can fulfill Congress’s mandate and prevent unlawful deals from slipping through the cracks.” These statements make an about-face by the FTC even less likely. Along similar lines, in a memorandum to FTC staff issued on 18 February 2025, Chair Ferguson stated unambiguously that the agencies’ 2023 Merger Guidelines will remain in place, representing “the framework for [the FTC’s] agency’s merger-review analysis.” He characterized the guidelines as “a restatement of prior iterations … and a reflection of what can be found in case law” and emphasized the importance of stability and reliance, warning that “if merger guidelines change with every new administration, they will become largely worthless to businesses and the courts.”
- Third, former Chair Lina Khan has not yet exited the FTC, leaving a continuing 3-2 Democrat majority that is unlikely to undo its own regulations. Even after Commissioner Khan leaves, there will be a 2-2 Democrat-Republican deadlock that could hamstring votes on any new rulemaking until her replacement is confirmed.
Litigation
On 10 January 2025, the US Chamber of Commerce (Chamber) and a coalition of business groups sued the FTC and then-Chair Khan in federal district court alleging that the Rules violate the Administrative Procedure Act (APA) and should be struck down. The Chamber’s main allegations are that (1) the FTC exceeded its statutory authority under the HSR Act by requiring information that is beyond “necessary and appropriate” to enable the agencies to determine, during the initial 30-day waiting period, whether a transaction may harm competition; (2) the FTC failed to engage in proper cost-benefit analysis; and (3) the agency failed to identify a problem with the prior rules that would justify a departure from the status quo. While the Chamber’s claims are well-argued and the case is before a Trump-appointed judge, the FTC took great pains in the several-hundred-page final Rule to lay a foundation to anticipate and fend off an APA challenge. So far, the Chamber has not sought a temporary restraining order or preliminary injunction to halt the Rules while the litigation is pending, and the docket has been quiet.
Act of Congress
The Congressional Review Act (CRA) requires agencies to submit final rules to Congress and the Government Accountability Office before they take effect. Once a rule is submitted, any member can introduce a joint resolution disapproving the rule. A simple majority vote in both houses of Congress is required to move the measure to the president’s desk. If the president signs off (subject to veto by a two-thirds majority vote in both chambers), the rule is nullified, and the agency is prohibited from reissuing the same or a substantially similar regulation. The CRA has a look-back mechanism that allows Congress to review the new Rules even though they have already gone into effect. On 11 February 2025, Congressman Scott Fitzgerald (R-WI) introduced a CRA resolution of disapproval to repeal the new Rules. It is unclear whether the resolution will see the light of day given other legislative priorities and Congress’s narrow window of opportunity under a unified Republican government. Moreover, the CRA has seldom been successfully used to void regulations. Members have introduced over 200 joint resolutions of disapproval for more than 125 rules since the CRA’s enactment in 1996 and only 19 rules have been overturned.
IS THERE A SILVER LINING FOR DEALMAKERS?
On the bright side, the rollout of the new Rules has been accompanied by steady guidance and engagement from the FTC Premerger Notification Office (PNO), a departure from its general approach under the Biden administration. Moreover, early termination of the 30-calendar-day HSR waiting period is back on the table. It is also worth noting that the PNO received a deluge of filings just before the new Rules took effect. According to Chair Ferguson, the PNO “typically sees between 35 and 50 transactions per week. But during the last week under the old notification rules, the PNO received 394 filings accounting for about 200 transactions.”
WHAT SHOULD I DO NOW?
The new Rules are in effect, govern all HSR filings, and are unlikely to be nullified for the foreseeable future. As such, dealmakers should:
- Continue to work with counsel to understand the new requirements.
- Consider budget, timing, and the potential for increased visibility into business operations.
- Consider the new regime in determining deal timetables and negotiating transaction agreements, particularly for deals involving horizontal overlaps or vertical supply relationships, which trigger additional filing requirements.
- Conduct internal training for relevant personnel regarding document creation best practices and implement document-management protocols to limit exposure and filing burdens.
Victoria S. Duarte contributed to this article.