Dive Brief:
- A federal judge struck down a Federal Trade Commission regulation that required companies, including healthcare firms and hospitals, to provide more information to the agency ahead of mergers and acquisitions, likely slowing down dealmaking.
- The rule, finalized in 2024 under the Biden administration, exceeds the FTC’s statutory authority because the agency wasn’t able to show benefits from the regulation would outweigh its “significant and widespread costs,” Judge Jeremy Kernodle of Texas’ Eastern District wrote in the ruling last Thursday.
- The decision vacates the rule, but the court stayed the order for seven days to allow the FTC time to seek emergency relief from the appeals court.
Dive Insight:
The regulation had overhauled the Hart-Scott-Rodino Act premerger notification program, which alerts the federal government ahead of large mergers so officials can determine whether to conduct a more extensive antitrust review.
The rule, which went into effect last year, added a number of new disclosures to the premerger form, including details on company officers and directors, organizational charts, the firms’ rationale for combining, foreign subsidy information and other details.
The FTC argued the changes were necessary to determine whether deals could violate antitrust laws as mergers become increasingly complex. The agency estimated companies would likely need to spend an average of 105 hours to complete the new merger form, compared with 37 hours for the previous notification requirements.
In January 2025, business lobby the U.S. Chamber of Commerce and three other groups sued the federal government over the regulation, arguing the rule violated the Administrative Procedure Act. They claimed the information required by the rule exceeded the FTC’s legal authority and that the agency hadn’t demonstrated the benefits outweighed its costs.
Hospitals also opposed the update. In an amicus brief on the lawsuit, the American Hospital Association said mergers were a critical tool to save hospitals from closing their doors, and the rule will “significantly increase the complexity and costs of pursuing valuable merger activity.”
Kernodle sided with businesses suing to vacate the regulation. Though the FTC asserts the rule helps detect illegal deals and conserve resources, the agency didn’t prove those claims, he wrote in his ruling.
The FTC also wasn’t able to demonstrate the benefits were worth the extra costs and didn’t adequately explain why it rejected less burdensome alternatives, he added.
For now, companies submitting mergers through Feb. 19 should still use the form implemented by the vacated rule, and the FTC will provide more information soon, the agency said.
“We are reviewing the ruling and weighing our options,” Joseph Simonson, director of the FTC’s Office of Public Affairs, said in a statement to Healthcare Dive.
