In one of the most consequential rulings for M&A deals in recent years, S&C persuaded a district court to vacate a 2024 Federal Trade Commission rule that dramatically expanded the amount of information and documents that merging companies must disclose to the government under the Hart-Scott-Rodino Act. Jeff Wall, Judd Littleton, and Max Gottschall were named runner-up “Litigators of the Week” by The Am Law Litigation Daily for this result.
S&C challenged the rule on behalf of the U.S. Chamber of Commerce and other business groups. The rule amended the premerger notification form for the first time in the nearly 50 years since the HSR Act was enacted. It added 20 new categories of required information and documents to that form that thousands of companies must file each year, tripling the average cost of preparing the form and quadrupling it for half of those transactions.
In a February 12 decision, U.S. District Judge Jeremy Kernodle in the Eastern District of Texas held that the rule was unlawful. His decision construes the relevant language of the HSR Act for the first time and imposes meaningful limits on the FTC’s authority to amend the form in the future.
Specifically, the court held that the statute requires the FTC to show that the benefits of adding new categories of documents and information to the premerger notification form are worth the significant costs that doing so will impose on all HSR filers. The court also held that the FTC rule was arbitrary and capricious because the agency did not conduct a reasonable cost-benefit analysis, and because the FTC had failed to reasonably consider or explain its rejection of less-burdensome regulatory alternatives.
In addition to Jeff Wall, Judd Littleton, and Max Gottschall, the team included Phoebe Sam.