Premerger Notification Rule Gets Stay of Execution

In this piece for the On Competition Blog, authors David H. Evans & William C. MacLeod (Kelley Drye) discuss the legal challenge to the Federal Trade Commission’s new premerger notification rule under the Hart–Scott–Rodino Antitrust Improvements Act of 1976. A federal district court vacated the rule after concluding that the FTC had failed to demonstrate that its benefits justified the substantial compliance costs it would impose on companies filing merger notifications. Although the United States Court of Appeals for the Fifth Circuit temporarily reinstated the rule while the appeal proceeds, merging parties must for now continue submitting more expansive and burdensome filings.

The authors highlight the district court’s sharp criticism of the Federal Trade Commission, noting that the agency itself acknowledged the rule would significantly increase compliance costs—potentially tripling the burden on filers. The court found that the FTC failed to substantiate its claims that the rule would improve merger enforcement or meaningfully conserve agency resources. Given that only a small share of reportable transactions historically lead to investigations or second requests, the court questioned whether imposing additional obligations on the vast majority of routine deals could be justified.

Evans and MacLeod argue that the rule exemplifies an inefficient regulatory approach that imposes heavy front-loaded information requirements to identify a small number of problematic mergers. They suggest that more targeted reforms—such as adjusting document requirements to focus on materials reflecting competitive concerns—would be preferable to broad data-collection mandates. In their view, the agencies should reconsider the rule rather than continue pursuing the appeal, emphasizing that excessive filing burdens ultimately raise transaction costs without delivering clear enforcement benefits.

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