Fifth Circuit Reinstates Legacy HSR Rules, Easing M&A Burdens for Startups

The U.S. Court of Appeals for the Fifth Circuit has delivered a significant blow to the Federal Trade Commission’s (FTC) efforts to overhaul the merger review process. By denying the agency’s motion for a stay pending appeal, the court has effectively neutralized the expanded Hart-Scott-Rodino (HSR) filing requirements that were introduced in early 2025. For the startup and venture capital ecosystem, this ruling marks a pivotal shift in the M&A landscape, rolling back a regulatory regime that many argued had become a prohibitive barrier to exit and consolidation.

The immediate consequence of the March 19, 2026, order is a mandatory reversion to the pre-February 10, 2025, HSR filing framework. Under the now-vacated 2025 rules, merging parties were required to provide exhaustive documentation regarding labor markets, supply chain dependencies, and detailed competitive analyses—requirements that added hundreds of hours to the preparation of a standard filing. For growth-stage startups with limited administrative resources, these requirements often translated into significant legal fees and delayed deal timelines. The Fifth Circuit’s refusal to pause the district court’s vacatur means that, for now, the 'short-form' era of HSR has returned.

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Court of Appeals for the Fifth Circuit has delivered a significant blow to the Federal Trade Commission’s (FTC) efforts to overhaul the merger review process.

From a strategic perspective, the FTC’s response has been one of pragmatic retreat. The agency announced that it will immediately begin accepting filings under the legacy form and instructions. However, in a move that signals its intent to continue aggressive oversight, the FTC stated it will still accept the 2025-style filings on a voluntary basis. This creates a nuanced tactical environment for dealmakers. While the legal obligation to provide expanded data is gone, some parties may choose to submit more information upfront to preemptively address potential antitrust concerns and avoid the dreaded 'Second Request.'

However, the relief for startups may be partially tempered by the FTC's remaining enforcement tools. Legal experts warn that the agency is likely to increase its use of 'voluntary access letters' during the initial 30-day waiting period. These letters request much of the same information that was required under the vacated 2025 rules. While technically voluntary, a failure to comply can often lead the agency to issue a formal Second Request, which can stall a deal for months. Therefore, while the 'front-end' burden of the initial filing has decreased, the 'back-end' scrutiny of the investigation phase remains a high-stakes hurdle for tech acquisitions.