 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued March 24, 2015                   Decided June 9, 2015

                        No. 14-5182

   PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF
                     AMERICA,
                    APPELLANT

                              v.

               FEDERAL TRADE COMMISSION,
                       APPELLEE


        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:13-cv-01974)


    Evan A. Young argued the cause for appellant. With him
on the briefs were Aaron M. Streett, Shane Pennington, Wm.
Bradford Reynolds, Joseph A. Ostoyich, and James F. Rill.

     Michele Arington, Assistant General Counsel, Federal
Trade Commission, argued the cause for appellee. With her
on the brief were William J. Baer, Assistant Attorney General,
U.S. Department of Justice, Kristen C. Limarzi, Chief,
Appellate Section, Robert J. Wiggers, Attorney, Jonathan E.
Nuechterlein, General Counsel, Federal Trade Commission,
David C. Shonka, Principal Deputy General Counsel, and Joel
Marcus, Assistant General Counsel. John F. Daly, Attorney,
Federal Trade Commission, appeared as trial counsel.
                              2

    Before: GRIFFITH, Circuit Judge, MILLETT, Circuit Judge,
and EDWARDS, Senior Circuit Judge.

   Opinion for the Court filed by Senior Circuit Judge
EDWARDS.

     EDWARDS, Senior Circuit Judge: The Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the “Act” or “HSR
Act”) was passed by Congress “[t]o improve and facilitate the
expeditious and effective enforcement of the antitrust laws.”
Pub. L. No. 94-435, 90 Stat. 1383, 1383 (codified as amended
at 15 U.S.C. § 18a). The Act added Section 7A to the Clayton
Antitrust Act of 1914, 15 U.S.C. § 12 et seq., to establish
notification and waiting requirements for large acquisitions
and mergers. The principal purpose of the Act is to facilitate
Government identification of mergers and acquisitions likely
to violate federal antitrust laws before the proposed deals are
consummated. The Federal Trade Commission (“FTC” or
“Commission”), with the concurrence of the Assistant
Attorney General for the Antitrust Division, has extensive
authority under the Act to define terms in the HSR Act and to
promulgate regulations necessary to carry out the purposes of
the Act.

     In 2013, following notice and comment rulemaking, the
FTC modified its reportable asset acquisition regulations to
clarify that, even if patent holders retain limited
manufacturing rights or co-rights, transfers of patent rights
within the pharmaceutical industry constitute reportable asset
acquisitions if all commercially significant rights are
transferred (the “Rule”). Premerger Notification; Reporting
and Waiting Period Requirements (“Notice of Final
Rulemaking”), 78 Fed. Reg. 68,705, 68,706–07 (Nov. 15,
2013). Before the adoption of this Rule, the FTC had
                               3
considered a transfer of patent rights to be a reportable asset
acquisition only if all rights to make, use, and sell the patent
were passed to the acquiring person. The FTC’s 2013
rulemaking action clarified that reportable asset requirements
apply to transactions in the pharmaceutical industry in which
the licensor transfers exclusive patent rights but retains
limited manufacturing rights or co-rights to the patent. The
FTC explained that the Rule focuses on the pharmaceutical
industry because the agency had not found any other industry
that relied on this type of patent transfer arrangement. The
Commission made it clear, however, that if other industries
adopted patent transfer practices of the sort found in the
pharmaceutical industry, “such exclusive patent licenses
remain potentially reportable.” Id. at 68,709.

     In 2013, Appellant, Pharmaceutical Research and
Manufacturers of America (“PhRMA”), filed suit in District
Court challenging the FTC’s Rule. The District Court granted
summary judgment for the FTC, Pharm. Research & Mfrs. of
Am. v. FTC, 44 F. Supp. 3d 95 (D.D.C. 2014), and PhRMA
now appeals. PhRMA’s appeal to this court rests on several
causes of action arising under Section 706 of the
Administrative Procedure Act (“APA”), 5 U.S.C. § 706. First,
PhRMA contends that the Rule should be overturned under
Chevron U.S.A. Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984), either because it is precluded by
the plain meaning of the Act or because it is based on an
impermissible interpretation of the Act. Second, PhRMA
argues that the FTC’s action in adopting the Rule was
arbitrary and capricious and therefore the Rule should be
vacated pursuant to the commands of Motor Vehicle
Manufacturers Association of the United States, Inc. v. State
Farm Mutual Automobile Insurance Company (“State
Farm”), 463 U.S. 29 (1983), and its progeny. We find no
merit in these claims.
                                4

     It is noteworthy that PhRMA does not challenge the
FTC’s authority to regulate the pharmaceutical industry or the
particular patent transfers at issue in the Rule. Indeed,
PhRMA has made no argument in this appeal that the Rule
would be inconsistent with the Act or violate the APA if it
applied generally. As a result there is no claim before the
court that the FTC erred in its determination that the patent
transfers identified by the Rule are reportable asset
acquisitions under the HSR Act. PhRMA merely challenges
the form of the Rule in that it focuses on the pharmaceutical
industry.

     We affirm the judgment of the District Court because
none of PhRMA’s claims has merit. Nothing in the plain
meaning, context, or legislative history of the Act
unambiguously precludes the FTC from promulgating a rule,
the substance of which is clearly within its delegated
authority, merely because the rule focuses on a specific
industry that is the sole source of the problem being
addressed. Congress did not address the “precise question at
issue” here, but it did “explicitly [leave] a gap [in the statute]
for the agency to fill.” Chevron, 467 U.S. at 843. Therefore,
the only “question for the court is whether the agency’s
answer is based on a permissible construction of the statute.”
Id. We answer that question in the affirmative. The Rule is
obviously consistent with the purpose of the Act, which is to
improve the enforcement capabilities of the FTC and the
Department of Justice by facilitating their review of large
acquisitions before they are consummated. And the FTC’s
explanation for its promulgation of the Rule is perfectly
reasonable and supported by the record.

    We also reject PhRMA’s arguments that the FTC’s
adoption of the Rule was arbitrary and capricious. The
                               5
Commission reasonably explained and supported its position
during the rulemaking process, and PhRMA was in no way
prejudiced by any alleged lack of opportunity to comment on
the proposed rule.

                      I.   BACKGROUND

A. The HSR Act

    As noted above, the Act fosters Government
identification of mergers and acquisitions likely to violate
federal antitrust laws before the proposed transactions are
consummated. Pharm. Research, 44 F. Supp. 3d at 100 (citing
S. REP. NO. 94-803, at 1 (1976); H.R. REP. NO. 94-1373, at 5
(1976); Mattox v. FTC, 752 F.2d 116, 119–20 (5th Cir.
1985)). The statute states in part that,

    [e]xcept as exempted pursuant to subsection (c) of this
    section, no person shall acquire, directly or indirectly,
    any voting securities or assets of any other person, unless
    both persons (or in the case of a tender offer, the
    acquiring person) file notification pursuant to rules under
    subsection (d)(1) of this section and the waiting period
    described in subsection (b)(1) of this section has expired
    ....

15 U.S.C. § 18a(a). A merger or acquisition triggers the Act’s
requirements if one of the parties “is engaged in commerce or
in any activity affecting commerce” and one of the threshold
financial values defined in the Act is met. Id. § 18a(a)(1), (2).
The HSR Act does not define “asset[],” “acquire,” or
“person.” It does, however, list a number of exempt
transactions, id. § 18a(c), none of which are relevant here.
                               6
    The Commission’s delegated authority under the Act is
extensive. The Act provides in relevant part that:

     The Federal Trade Commission, with the concurrence of
     the Assistant Attorney General and by rule in
     accordance with section 553 of Title 5, consistent with
     the purposes of this section—

          (1) shall require that the notification required under
          subsection (a) of this section be in such form and
          contain such documentary material and information
          relevant to a proposed acquisition as is necessary
          and appropriate to enable the Federal Trade
          Commission and the Assistant Attorney General to
          determine whether such acquisition may, if
          consummated, violate the antitrust laws; and

          (2) may—

                (A) define the terms used in this section;

                (B) exempt, from the requirements of this
                section, classes of persons, acquisitions,
                transfers, or transactions which are not likely
                to violate the antitrust laws; and

                (C) prescribe such other rules as may be
                necessary and appropriate to carry out the
                purposes of this section.

Id. § 18a(d).

    The Act also provides enforcement mechanisms for the
FTC and the Assistant Attorney General. The FTC or the
Assistant Attorney General may apply to the United States
                               7
district courts to “order compliance” or “grant such other
equitable relief as the court in its discretion determines
necessary or appropriate.” Id. § 18a(g)(2)(A), (C). It also
provides for civil penalties of up to $10,000 for each day
against “[a]ny person, or any officer, director, or partner
thereof, who fails to comply with any provision of this
section.” Id. § 18a(g)(1).

B. The Rule

     The FTC’s disputed Rule is premised on certain
undisputed assumptions: the Act covers asset acquisitions; a
patent is an asset; therefore, the acquisition of a patent is
potentially reportable under the Act. See Premerger
Notification; Reporting and Waiting Period Requirements
(“Notice of Proposed Rulemaking”), 77 Fed. Reg. 50,057,
50,058 (Aug. 20, 2012). Prior to the adoption of the Rule, the
FTC had determined that a transfer of rights to a patent was a
reportable asset acquisition only if all of the rights to “make,
use, and sell” a patent or part of a patent were exclusively
transferred to the licensee. This was because “[a]n exclusive
license is substantively the same as buying the patent or part
of the patent outright, and carries the same potential
anticompetitive effects.” Notice of Final Rulemaking, 78 Fed.
Reg. at 68,706.

     Transactions in the pharmaceutical industry caused the
FTC to reconsider its position regarding when transfers of
patents are reportable asset acquisitions. In the rulemaking
leading to the new Rule, the FTC explained:

    In recent years . . . it has become more common for
    pharmaceutical companies to transfer most but not all of
    the rights to “make, use, and sell” under an exclusive
    license, such that the “make, use and sell” approach is no
                              8
    longer adequate in evaluating the reportability of
    exclusive licenses in the pharmaceutical industry for
    HSR purposes. A licensor will often, for example, retain
    the right to manufacture under the patent, but under the
    agreement the licensor can only manufacture for the
    licensee. In such a case, under the [FTC’s Premerger
    Notification Office’s (“PNO’s”)] “make, use, and sell”
    approach, the retention of the right to manufacture would
    render the transaction non-reportable even though the
    licensor would not be manufacturing for its own
    commercial use, but exclusively for the licensee. . . . This
    rule addresses when an exclusive patent license to a
    pharmaceutical patent or part of a patent constitutes an
    asset transfer under the HSR Act.

         The “all commercially significant rights” test in the
    rule captures more completely what the “make, use, and
    sell” approach was a proxy for, namely whether the
    license has transferred the exclusive right to
    commercially use a patent or a part of a patent.
    § 801.2(g)(3) of the rule provides that the transfer of
    exclusive rights to a patent or a part of a patent in the
    pharmaceutical industry is a reportable asset transfer if it
    allows only the recipient to commercially use the patent
    as a whole, or a part of the patent in a particular
    therapeutic area or specific indication within a
    therapeutic area. The rule codifies the PNO’s long-
    standing position that the retention of co-rights does not
    render a license to the patent or part of the patent as non-
    exclusive. The rule also provides that such a reportable
    asset transfer may occur even if the licensor retains the
    limited right to manufacture under the patent or part of a
    patent for the licensee.

Id. at 68,706–07 (footnote omitted).
                                9

     The Rule includes definitions of “all commercially
significant rights,” “limited manufacturing rights,” and “co-
rights” when such rights are transferred and/or retained in the
context of an exclusive transfer of rights to a pharmaceutical
patent. Id. at 68,712–13. The Rule also provides that a
“transfer of patent rights [to a pharmaceutical patent]
constitutes an asset acquisition” if “all commercially
significant rights” are transferred even if the licensor retains
“limited manufacturing rights” or “co-rights.” Id. at 68,713.
The Rule was adopted as proposed on November 15, 2013,
and became effective on December 16, 2013. Id. at 68,705–
06.

     The FTC’s determination that an exclusive transfer of
rights to a patent or part of a patent, in a situation in which the
licensor retains “limited manufacturing rights” or “co-rights,”
is a reportable asset acquisition under the HSR Act is not in
dispute in this case. PhRMA merely challenges the Rule’s
focus on the pharmaceutical industry.

C. The FTC’s Rulemaking

     During the rulemaking proceedings, PhRMA opposed the
FTC’s Rule on the grounds that it “burdens . . . only a single
industry to the exclusion of all others” and that it constitutes
“discriminatory treatment of the pharmaceutical industry”
because the Rule applies only to that industry. Comments of
PhRMA on Notice of Proposed Rulemaking, reprinted in
Joint Appendix (“JA”) 12–13. In support of its position,
PhRMA submitted the declaration of an economic consultant,
Dr. Varner, which purported to refute the FTC’s observation
that the types of transactions at issue were limited to the
pharmaceutical industry. Varner Declaration, reprinted in JA
28–47. Representatives of PhRMA also met with FTC
                             10
Commissioners to discuss the Rule. It does not appear that, in
its written comments and in its meetings with the
Commission, PhRMA ever disputed the FTC’s determination
that the exclusive license agreements that were covered by the
Rule were asset acquisitions that were properly subject to the
Act’s reporting requirements.

    The FTC responded in detail to each of PhRMA’s
objections. See 78 Fed. Reg. at 68,707–12; see also Pharm.
Research, 44 F. Supp. 3d at 106–10 (describing in detail
PhRMA’s objections and the FTC’s response to each of
them). As relevant to the issues raised on appeal, the FTC
elaborated on the reason why the Rule focused on the
pharmaceutical industry:

    For the five-year period ending December 31, 2012, the
    PNO received filings for 66 transactions involving
    exclusive patent licenses, and all were for pharmaceutical
    patents. The PNO has not found other industries that rely
    on these types of arrangements. . . . In addition, requests
    for guidance on the treatment of exclusive patent
    licensing transactions have generally been limited to the
    pharmaceutical industry. Accordingly, the Commission
    has not found a need for a rule applicable to other
    industries. Moreover, the Commission’s experience with
    such transactions in the pharmaceutical industry allows it
    to develop a rule that is tailored to exclusive patent
    licenses in the pharmaceutical industry, defining the
    relevant scope of the transfer of part of a patent by
    reference to the therapeutic area or specific indication
    within a therapeutic area.

Notice of Final Rulemaking, 78 Fed. Reg. at 68,708. The FTC
stated further that, “[b]ased on HSR filings and requests for
advice on the reportability of transactions, the PNO has found
                                11
that exclusive patent licensing agreements that transfer all of
the rights to commercially use a patent or part of a patent
almost solely occur in the pharmaceutical industry.” Id. The
Commission made it clear, however, that to the extent that
comparable agreements might exist in other industries, the
“exclusive patent licenses [in those other industries would]
remain potentially reportable.” Id. at 68,709.

    The FTC explained that the licensing agreements cited in
the Varner Declaration were not the same as the transactions
the FTC had seen in the pharmaceutical industry. On this
point the agency said:

      The agreements cited by Comment 2 are not the kind of
      agreements that are the subject of the rule. They are
      exclusive distribution agreements, which convey to the
      licensee only the exclusive right to distribute the patented
      product. In exclusive distribution agreements, the
      licensor retains not just the right to manufacture but all
      commercially significant rights to the patent, such that no
      reportable asset acquisition takes place.

Id.

     The FTC additionally addressed PhRMA’s comment that
the agency lacked statutory authority to promulgate the Rule.
The FTC said that its action was justified by its authority to
define terms and to prescribe rules “as may be necessary and
appropriate to carry out the purposes of this section.” Id. at
68,709. The FTC rejected PhRMA’s “all-or-nothing
approach,” explaining that it had the discretion to “proceed
incrementally” in promulgating rules that were designed to
address known problems. Id. at 68,709–10 & n.30 (citing
cases).
                                 12
     PhRMA filed suit in the District Court, arguing “that the
limited application of the Rule to the pharmaceutical industry
exceeds the FTC’s grant of statutory authority under the HSR
Act, in violation of 5 U.S.C. § 706(2)(C), and was arbitrary
and capricious, in violation of 5 U.S.C. § 706(2)(A).” Pharm.
Research, 44 F. Supp. 3d at 114 (citations omitted). The
parties filed cross-motions for summary judgment. In a very
thorough opinion, the District Court found no merit in
PhRMA’s claims and granted summary judgment in favor of
the FTC.

                          II. ANALYSIS

A. Standard of Review

     On appeal from a grant of summary judgment, our review
is de novo. See Jicarilla Apache Nation v. U.S. Dep’t of
Interior, 613 F.3d 1112, 1118 (D.C. Cir. 2010). “In a case like
the instant one, in which the District Court reviewed an
agency action under the APA, we review the administrative
action directly, according no particular deference to the
judgment of the District Court.” Holland v. Nat’l Mining
Ass’n, 309 F.3d 808, 814 (D.C. Cir. 2002).

       PhRMA claims that the FTC action violates Section
706(2)(C), which states that a court may “hold unlawful and
set aside agency action, findings, and conclusions found to be
. . . in excess of statutory jurisdiction, authority, or limitations,
or short of statutory right.” 5 U.S.C. § 706(2)(C). In
addressing this claim, we apply the familiar Chevron
framework. The first step is to determine whether Congress
has directly addressed the “precise question at issue.”
Chevron, 467 U.S. at 842. If not, we then proceed to Chevron
Step Two. Under this step, “[i]f Congress has explicitly left a
gap for the agency to fill, there is an express delegation of
                               13
authority to the agency to elucidate a specific provision of the
statute by regulation. Such legislative regulations are given
controlling weight unless they are arbitrary, capricious, or
manifestly contrary to the statute.” Id. at 843–44.

     As is often the case, our review here of the FTC’s
interpretation of its authority under Chevron Step Two
overlaps with our arbitrary and capricious review under 5
U.S.C. § 706(2)(A). See EDWARDS, ELLIOTT, & LEVY,
FEDERAL STANDARDS OF REVIEW 217–18 (2d ed. 2013)
(discussing the interplay of Chevron Step Two and arbitrary
and capricious review). Section 706(2)(A) provides that a
court may “hold unlawful and set aside agency action,
findings, and conclusions found to be . . . arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.” In this case, in light of the claims
raised by PhRMA, arbitrary and capricious review requires us
to consider whether the FTC action is supported by reasoned
decisionmaking, Allentown Mack Sales & Serv., Inc. v. NLRB,
522 U.S. 359, 374 (1998); whether the agency “relied on
factors which Congress [did] not intend[] it to consider,” State
Farm, 463 U.S. at 43; and whether the Rule was promulgated
in “observance of procedure required by law,” 5 U.S.C.
§ 706(2)(D).

B. The FTC’s Rule Does Not Violate the Plain Terms of
   the Act (Chevron Step One)

     It is axiomatic that, “[b]efore a court may invoke
Chevron Step One, it must find that ‘the intent of Congress is
clear,’ meaning that the statutory provision at issue is
‘unambiguous[]’ with respect to the question presented.”
EDWARDS, ELLIOTT, & LEVY, supra, at 174 (quoting Chevron,
467 U.S. at 842–43) (second alteration in original). We look
to the “text, structure, purpose, and history” of the statute for
                               14
evidence of congressional intent on the precise question at
issue. See Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S.
581, 600 (2004). Here, the “precise question” before the court
is whether the Act unambiguously precludes the FTC from
promulgating a rule, the substance of which is clearly within
its delegated authority, merely because the rule focuses on a
specific industry that is the sole source of the problem being
addressed. Given the relevant terms of the statute, the answer
is no.

     The Act provides that “[e]xcept as exempted pursuant to
subsection (c) of this section, no person shall acquire, directly
or indirectly, any voting securities or assets of any other
person, unless both persons . . . file notification pursuant to
rules under subsection (d)(1) of this section [and satisfy the
prescribed waiting period].” 15 U.S.C. § 18a(a). “Person” is
not defined. However,

    Subsection (d)(2)(A) authorizes the FTC to “define the
     terms used in this section”;

    Subsection (d)(1) says that the FTC “shall require that
     the notification required under subsection (a) of this
     section be in such form and contain such documentary
     material and information relevant to a proposed
     acquisition as is necessary and appropriate to enable
     the Federal Trade Commission and the Assistant
     Attorney General to determine whether such
     acquisition may, if consummated, violate the antitrust
     laws”; and

    Subsection (d)(2)(C) authorizes the FTC to “prescribe
     such other rules as may be necessary and appropriate to
     carry out the purposes of this section.”
                              15
Id. § 18a(d). Taken together, these statutory provisions give
the FTC, with the concurrence of the Assistant Attorney
General, great discretion to define statutory terms and to
promulgate rules to facilitate Government identification of
mergers and acquisitions likely to violate federal antitrust
laws before the mergers and acquisitions are consummated.
PhRMA has not identified any statutory language that
unambiguously limits the FTC’s great discretion in any way
relevant to this case.

     It is true that Section 18a(c) lists certain “classes of
transactions” that are exempt from the filing requirements of
the Act, but the exemptions do not, as PhRMA claims,
purport to limit or otherwise define “person” in the phrase “no
person shall acquire” in Section 18a(a). Rather, the reference
to “no person shall acquire” reasonably can be construed to
refer to persons who are not exempt and who are otherwise
subject to the regulations promulgated by the FTC to enforce
the terms of the Act. The Commission was not obliged to
“exempt” any industries when it adopted the Rule. Indeed, the
record indicates that the FTC did not mean to exempt other
industries from the Rule because it recognized that the
problem uncovered in the pharmaceutical industry might one
day appear in other industries and remain potentially
reportable.

     This view of the statute is reinforced by the provisions of
Subsection (d), which addresses “Commission rules.” 15
U.S.C. § 18a(d). The statute makes it clear that the
Commission “may” “exempt . . . classes of persons,
acquisitions, transfers, or transactions which are not likely to
violate the antitrust laws.” Id. § 18a(d)(2)(B) (emphasis
added). However, as noted above, the statute also makes it
clear that the Commission “may” “prescribe such other rules
as may be necessary and appropriate to carry out the purposes
                              16
of this section.” Id. § 18a(d)(2)(C) (emphasis added). In other
words, the Act does not compel the FTC to cabin regulated
“persons” solely by resorting to exemptions from generally
applicable rules.

     Given this reasonable view of the Act, it is fairly plain
that the statute did not unambiguously prohibit the FTC from
focusing on the pharmaceutical industry in its 2013
rulemaking action. The Rule at issue was adopted to address a
problem that was specific only to the pharmaceutical industry.
And the FTC acted within the compass of the statutory
authority given to the agency pursuant to Section 18a(d)(2)(C)
when it adopted a rule focused on that group.

     Furthermore, the Rule is perfectly consistent with the
purposes of the Act. The HSR Act was enacted to assist the
FTC in enforcing other provisions of the Clayton Act, and to
give the FTC and the Department of Justice a tool to identify
problematic mergers and acquisitions before they were
consummated. S. REP. NO. 94-803, at 1, 7 (stating that the
purpose of the Act “is to support and invigorate effective and
expeditious enforcement of antitrust laws, to improve and
modernize antitrust investigation and enforcement
mechanisms,” and “to facilitate [the antitrust authorities in]
enjoining illegal mergers before they are consummated.”);
H.R. REP. NO. 94-1373, at 8–10 (explaining the difficulties for
the government in challenging anti-competitive mergers after
they have been completed and stating that the advance
notification requirements will both improve enforcement
efficacy and save resources wasted in post-merger
enforcement proceedings). Given these purposes, it would
have made no sense for Congress to restrict the FTC from
focusing on review of particular types of transactions that the
agency determines occur only in one industry.
                              17
     PhRMA advances an entirely unconvincing argument
that the FTC’s action should be vacated because the agency
acted outside the bounds of its delegated authority when it
promulgated the Rule. The argument is specious because it
wrongly assumes that Congress intended to compel the FTC
to issue only rules of general applicability across industries
except when exempting certain industries from coverage. As
shown above, this is not what the statute says. The Act is at
worst ambiguous on this point, but the provisions of 15
U.S.C. § 18a certainly do not unambiguously limit the
authority of the FTC in the way that PhRMA contends. And,
as the Supreme Court has made clear, a court must defer
under Chevron to an agency’s reasonable interpretation of a
statutory ambiguity that concerns the scope of the agency’s
statutory authority. City of Arlington v. FCC, 133 S. Ct. 1863
(2013). We do so here.

     In another vain effort to support its argument that the
statute precludes the Rule, PhRMA asserts that the Rule
“imposes notification requirements on persons in the
pharmaceutical industry who propose certain transactions but
not on persons in other industries proposing identical
transactions.” Br. for Appellant 19. This assertion finds no
support in the record. The Rule focuses on the pharmaceutical
industry because that was the only industry in which the FTC
had seen such arrangements. Moreover, as noted above, the
Commission has repeatedly explained that if such
arrangements arise in other industries, they too will be
potentially reportable under the Act. Notice of Final
Rulemaking, 78 Fed. Reg. at 68,706, 68,709.

    PhRMA also argues that the statute viewed in context
supports its view that the Rule violates the plain terms of the
Act. According to PhRMA, “the HSR Act is a component of a
far larger, and quite complex, antitrust statutory scheme,
                               18
which includes many industry-specific statutes.” Br. for
Appellant 24. “Congress was thus aware of extant industry-
specific antitrust laws when it drafted the HSR Act and
intentionally imposed a general notification requirement.” Id.
at 25. We disagree. As explained above, the provisions of 15
U.S.C. § 18a simply do not support this construction of the
Act. To prevail on its Chevron Step One argument, PhRMA
has to do better than concoct an interpretation purportedly
based on the statute’s context. PhRMA “must show that the
statute     unambiguously       forecloses     the   [agency’s]
interpretation.” Vill. of Barrington v. Surface Transp. Bd., 636
F.3d 650, 661 (D.C. Cir. 2011). PhRMA’s “context”
argument fails to do this.

     PhRMA additionally contends that the legislative history
of the Act demonstrates Congress’s intent to restrict the
FTC’s authority to impose reporting requirements upon
specific industries to the exclusion of others. It attempts to
support this claim by arguing that a Senate bill that was
before Congress, which did not pass, would have given the
FTC “carte blanche power to impose or withhold notification
requirements.” Br. for Appellant 30 (citing S. 1284, 94th
Cong. § (b)(3) (1975)). According to PhRMA, the law that
was enacted is less sweeping in its terms than the Senate bill
that did not pass, and “[t]his history demonstrates that
Congress specifically contemplated – and declined – giving
FTC the authority that it now illicitly claims as its own.” Id. at
31. The District Court thoroughly and convincingly debunked
PhRMA’s legislative history argument, finding that the
legislative history shows only Congress’s concern that small
businesses and mergers not be burdened with the notification
requirements. Pharm. Research, 44 F. Supp. 3d at 119–22;
see also Earl W. Kintner et al., The Hart-Scott-Rodino
Antitrust Improvements Act of 1976: An Analysis, 46 GEO.
WASH. L. REV. 1, 13 n.72 (1977).
                               19

     The most telling response to PhRMA’s legislative history
argument is that the enacted provisions of 15 U.S.C. § 18a,
read together, did not preclude the FTC from adopting the
Rule. By expressly granting the FTC the authority to “define
the terms used in this section” and to “prescribe such other
rules as may be necessary and appropriate to carry out the
purposes of this section,” 15 U.S.C. § 18a(d)(2)(A), (C),
Congress “explicitly left . . . gap[s] for the agency to fill.”
Chevron, 467 U.S. at 843. PhRMA’s claim that the Act
unambiguously bars the FTC from promulgating a rule, which
in substance is within its delegated authority, if the rule
focuses on a specific industry that is the sole source of the
problem being addressed is fanciful. We therefore reject
PhRMA’s invocation of Chevron Step One.

C. This Court Owes Deference to the FTC Because the
   Contested Rule Embodies a Permissible Construction of
   the Act (Chevron Step Two)

     If, as we have found in this case, “the statute is silent or
ambiguous with respect to the specific issue, the question for
the court is whether the agency’s answer is based on a
permissible construction of the statute.” Chevron, 467 U.S. at
843. And if, as we have found, “Congress has explicitly left a
gap for the agency to fill, there is an express delegation of
authority to the agency to elucidate a specific provision of the
statute by regulation. Such legislative regulations are given
controlling weight unless they are arbitrary, capricious, or
manifestly contrary to the statute.” Id. at 843–44. Thus, at
Chevron Step Two, our focus is on “whether the [agency] has
reasonably explained how the permissible interpretation it
chose is rationally related to the goals of the statute.” Vill. of
Barrington, 636 F.3d at 665 (internal quotation marks
omitted).
                             20

      There is no doubt that the Commission’s action was taken
pursuant to express delegations of authority. The Act grants
the FTC the authority to act by rulemaking, 15 U.S.C.
§ 18a(d), to “define the terms used in this section,” and to
“prescribe such other rules as may be necessary and
appropriate to carry out the purposes of this section,” id.
§ 18a(d)(2)(A), (C). Given the terms of the Act, and for the
reasons enunciated in part II.B and articulated below, we have
little trouble in concluding that the Rule is not “manifestly
contrary to the statute.” Chevron, 467 U.S. at 844.

     There is also no doubt that the Commission clearly and
reasonably explained why it adopted the Rule. The FTC
importantly noted that it was “not expanding the HSR [Act’s]
requirements to parties or transactions not covered by the
Act,” but “simply clarifying the types of transactions that
constitute asset transfers for which the Act requires prior
notification.” Notice of Final Rulemaking, 78 Fed. Reg. at
68,709. The FTC determined that the Rule reflected a
necessary and important clarification of its regulatory policy
because, “due to the evolution of pharmaceutical patent
licenses, the ‘make, use, and sell’ approach [was] no longer
adequate to evaluate the HSR reportability of exclusive patent
licenses in the pharmaceutical industry.” Id. at 68,707. Such
exclusive patent licenses, the FTC explained, are reportable
asset acquisitions under the Act “even if the licensor retains
the limited right to manufacture under the patent or part of a
patent for the licensee.” Id.

     The FTC further explained that, in its experience, these
types of arrangements had only occurred in the
pharmaceutical industry. Specifically, in the five years prior
to the rulemaking,
                               21
   the [FTC’s Premerger Notification Office] received filings
   for 66 transactions involving exclusive patent licenses,
   and all were for pharmaceutical patents. The PNO has not
   found other industries that rely on these types of
   arrangements. . . . In addition, requests for guidance on
   the treatment of exclusive patent licensing transactions
   have generally been limited to the pharmaceutical
   industry.

Id. at 68,708.

    Finally, the Commission explained that the agency’s
“experience with such transactions in the pharmaceutical
industry allow[ed] it to develop a rule that is tailored to
exclusive patent licenses in the pharmaceutical industry,
defining the relevant scope of the transfer of part of a patent
by reference to the therapeutic area or specific indication
within a therapeutic area.” Id.

      The FTC’s interpretation of the Act reflected in the Rule
is obviously “rationally related to the goals of” the statute. See
Vill. of Barrington, 636 F.3d at 665 (internal quotation marks
omitted). And the Commission’s explanation for focusing on
the pharmaceutical industry is perfectly reasonable. See
Animal Legal Def. Fund v. Glickman, 204 F.3d 229, 235
(D.C. Cir. 2000) (“[W]e accord agencies broad deference in
choosing the level of generality at which to articulate rules.”).
It is not the role of this court to second-guess the agency on
these matters.

    PhRMA contends that the FTC’s interpretation of its
authority under the Act is not entitled to deference under
Chevron Step Two because “[i]n thirty-seven years of
administering the HSR Act, [the] FTC not only never claimed
authority to impose the notification requirements in an
                              22
industry-targeted manner, but rejected that heretofore
undiscovered carte blanche grant of authority from § 18a.” Br.
for Appellant 37 (internal quotation marks omitted). This
argument cannot carry the day. PhRMA quotes language from
a 1978 FTC notice of final rules implementing the pre-merger
notification requirements of the HSR Act, in which the FTC
declined to exempt joint ventures in specific industries from
the Act’s reporting requirements. Id. at 37–38 (quoting
Premerger Notification; Reporting and Waiting Period
Requirements, 43 Fed. Reg. 33,450, 33,496 (July 31, 1978)).
However, the FTC’s reasoning in this notice regarding its
exemption authority says nothing about the FTC’s
interpretation of its separate authority to define when an asset
acquisition is reportable under the Act; thus, we are hardly
persuaded by PhRMA’s argument that the Rule represents a
departure from past practice. The record does not indicate that
the FTC has ever previously indicated that it lacked the
authority to act as it did when it promulgated the Rule.

    Furthermore, even if the FTC had viewed its authority
under the Act differently in the past and then expressed an
intention to embrace a different construction of the Act when
it adopted the Rule, the prior interpretation of the Act would
not foreclose it from changing its position. Rust v. Sullivan,
500 U.S. 173, 186–87 (1991) (the Supreme Court “has
rejected the argument that an agency’s interpretation ‘is not
entitled to deference because it represents a sharp break with
prior interpretations’ of the statute in question”). That is not
the situation in this case, however, because the position that
PhRMA now attempts to attribute to the FTC is not one that
the agency has ever expressed. Thus, PhRMA’s argument
rests on nothing more than the faulty suggestion that, although
this is the first time that the FTC has taken a position on the
matter in dispute, it was precluded from adopting the Rule by
a “past practice” emanating from prior agency inaction. This
                              23
is an absurd proposition and it certainly finds no support in
the law.

D. The Commission’s Action Also Survives Review Under
   the Arbitrary and Capricious Standard

     Section 706(2)(A) of the APA provides that a reviewing
court shall “hold unlawful and set aside agency action,
findings, and conclusions found to be . . . arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A). “[T]he
touchstone of arbitrary and capricious review is reasoned
decisionmaking.” EDWARDS, ELLIOTT, & LEVY, supra, at 203.

    Normally, an agency rule would be arbitrary and
    capricious if the agency has relied on factors which
    Congress has not intended it to consider, entirely failed to
    consider an important aspect of the problem, offered an
    explanation for its decision that runs counter to the
    evidence before the agency, or is so implausible that it
    could not be ascribed to a difference in view or the
    product of agency expertise.

State Farm, 463 U.S. at 43.

    The analysis of disputed agency action under Chevron
Step Two and arbitrary and capricious review is often “the
same, because under Chevron step two, [the court asks]
whether an agency interpretation is ‘arbitrary or capricious in
substance.’” Judulang v. Holder, 132 S. Ct. 476, 483 n.7
(2011) (citing Mayo Found. for Med. Educ. & Research v.
United States, 562 U.S. 44, 53 (2011) (quoting Household
Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 242 (2004))).
Therefore, the analysis in part II.C, supra, rejecting PhRMA’s
                              24
Chevron Step Two arguments applies here as well in our
rejection of PhRMA’s claims resting on Section 706(2)(A).

      PhRMA raises a number of points in support of its claim
that the FTC’s adoption of the Rule was arbitrary and
capricious. First, PhRMA argues that there is no rational basis
for the Rule because the FTC only invoked its “experience” as
justification for “target[ing]” transactions in the
pharmaceutical industry, without describing or explaining
what that experience was. Br. for Appellant 39–40. Along
these same lines, PhRMA also contends that “the Rule is
arbitrary and capricious because it is based on considerations
[i.e., the “prevalence” of the transactions in the
pharmaceutical industry] which Congress has not intended
[the FTC] to consider.” Id. at 47 (internal quotation marks
omitted). These claims are unconvincing. The FTC’s basis for
the Rule was its unchallenged determination that patent
transfers covered by the Rule are asset acquisitions under the
Act. See Notice of Final Rulemaking, 78 Fed. Reg. at 67,706–
07. As explained earlier in this opinion, the FTC adequately
explained why the Rule focused on the pharmaceutical
industry. We need not cover this ground again. The FTC’s
cumulative experience with filings and fielding informal
requests for guidance was a valid basis for its decision to
promulgate a rule focused on the pharmaceutical industry. See
Nat’l Classification Comm. v. United States, 779 F.2d 687,
695 (D.C. Cir. 1985) (“It is beyond dispute that an agency
may provide the factual predicate for a finding by taking
‘official notice’ . . . of matters known to the agency through
its cumulative experience and consequent expertise.”
(citations omitted)).

    PhRMA additionally asserts that the “FTC offered no
reasoned basis for departing from its own longstanding
views.” Br. for Appellant 41. As discussed above, we reject
                              25
PhRMA’s claim that the Rule constitutes an impermissible
departure from past agency practice. Moreover, West
Deptford Energy, LLC v. FERC, which PhRMA relies on, is
inapposite. See 766 F.3d 10, 20–21 (D.C. Cir. 2014) (FERC’s
sudden departure from “unbroken Commission practice,”
without explanation and relying on patently unsupportive
agency precedent, was unjustified). In contrast to that case,
here, the FTC explained its reasons for crafting the Rule with
an industry-specific focus.

     PhRMA makes two final arguments attacking the FTC’s
rulemaking process. First, PhRMA argues that “[b]y
withholding . . . source information, [the] FTC impeded
PhRMA’s ability to challenge the agency’s basis for the Final
Rule and the courts’ ability to meaningfully review it.” Br. for
Appellant 48. Specifically, PhRMA objects that the FTC did
not produce the 66 filings received by the PNO that the FTC
described as involving exclusive patent licensing
arrangements in the pharmaceutical industry, and that the
FTC’s public database of informal requests is unhelpful
because it is incomplete and “heavily redacted.” Id. at 48–53.
Second, it argues that the FTC did not respond to the Varner
Declaration. Id. at 55. Both of these arguments fail.

    The FTC’s response to PhRMA’s objection that it did not
have access to the 66 filings is telling:

         PhRMA also suggests in passing that the
    Commission should have divulged the 66 individual HSR
    filings that it cited for the observation that
    pharmaceutical patents accounted for every single
    instance over the preceding five years in which parties
    filed HSR notification involving exclusive patent
    licenses. The HSR Act, however, makes such filings
    confidential. It provides that “[a]ny information or
                             26
    documentary material filed . . . pursuant to this section
    shall be exempt from disclosure . . . and no such
    information or documentary material may be made
    public,” except in circumstances not present here. 15
    U.S.C. § 18a(h); see JA 349–51 [citing the District Court
    opinion, Pharm. Research, 44 F. Supp. 3d at 131–32].
    The FTC thus had no lawful basis for revealing these
    reports to PhRMA, and PhRMA does not even contend
    otherwise on appeal.

         In any event, keeping these HSR filings confidential
    did nothing to prejudice PhRMA, and that lack of
    prejudice is itself fatal to PhRMA’s APA challenge. HSR
    filings do not represent the type of “technical studies and
    data” that aggrieved parties might wish to contest and
    that an agency might thus be required to make available
    for close scrutiny. And the Commission did not rely on
    these HSR filings to make a technical judgment or
    establish a technical standard. It used them only as a
    general source of background experience to inform its
    judgment that, in fact, exclusive patent licenses arise
    overwhelmingly in the pharmaceutical industry. The
    filings were relevant only because they involved
    exclusive licenses in the pharmaceutical industry, not
    because of their particular content.

Br. for FTC 42–43 (citations omitted). PhRMA’s briefs to the
court do not even address the disclosure exemption in 15
U.S.C. § 18a(h), and its Reply Brief offers no effective
rebuttal to the FTC’s additional points concerning the 66
filings.

     Furthermore, the agency’s database of informal guidance
is available online and searchable. Although the names and
contact information are redacted, the context of a guidance
                              27
document is often quite clear from reading the documents. See
FEDERAL TRADE COMMISSION, PREMERGER NOTIFICATION
PROGRAM: INFORMAL INTERPRETATIONS, available at
www.ftc.gov. “Not only is the database publicly available, but
PhRMA itself actually used it in formulating its comments on
the Rule. JA 22.” Br. for FTC 41 (citing PhRMA’s comments
on proposed Rule). Thus, it is clear that PhRMA had access to
the guidance requests and its claims to the contrary are
spurious.

     On the record here, there is nothing to indicate that
PhRMA was denied information to which it was entitled to
participate in the rulemaking proceeding. Indeed, the record
strongly reflects that PhRMA had ample opportunity to
comment during the rulemaking proceeding, and its views
were fully considered and addressed by the FTC. PhRMA
submitted an expert’s declaration with its comments. The
comments and declaration purported to show that the kinds of
exclusive rights transfers covered by the Rule also occurred in
other industries. Comments of PhRMA on Notice of Proposed
Rulemaking, JA 12–58. As noted above, the Commission
reasonably rejected the expert’s claims as being off point.
Notice of Final Rulemaking, 78 Fed. Reg. at 68,708–09.
PhRMA’s representatives also met personally with FTC
Commissioners four times to discuss their concerns about the
Rule. See JA 65–70. Yet, PhRMA produced nothing to rebut
the FTC’s findings that, in its experience, the types of
transactions covered by the Rule had arisen only in the
pharmaceutical industry.

     The cases cited by PhRMA involving agencies’ failures
to reasonably respond to public comment are readily
distinguishable. Business Roundtable v. SEC is inapposite
because the statute in that case expressly required the agency
to consider “the economic effects of a new rule,” which the
                             28
agency failed to do. See 647 F.3d 1144, 1148–49 (D.C. Cir.
2011). In both Louisiana Federal Land Bank Association v.
Farm Credit Administration, 336 F.3d 1075, 1080 (D.C. Cir.
2003), and PSEG Energy Resources & Trade LLC v. FERC,
665 F.3d 203, 210 (D.C. Cir. 2011), the agency acknowledged
the commenters’ objections but provided no other response to
them. The FTC did much more in this case in receiving and
responding to PhRMA’s objections.

     Finally, some of PhRMA’s arguments to this court might
be read to suggest that the FTC was less than forthcoming
during the rulemaking proceeding. As we have explained, the
record belies any such contention. “Because a presumption of
procedural regularity and substantive rationality attaches to
final agency action, aggrieved parties bear the burden of
demonstrating to a reviewing court that challenged agency
action merits reversal.” Nat’l Small Shipments Traffic
Conference, Inc. v. ICC, 725 F.2d 1442, 1455 (D.C. Cir.
1984). PhRMA has offered no good reason to rebut the
presumption of procedural regularity in the agency’s handling
of this case.

    The FTC action is supported by reasoned
decisionmaking; the agency did not rely on factors which
Congress did not intend for it to consider; and the Rule was
promulgated in observance of procedures required by law. In
sum, there is nothing in the record to support PhRMA’s
claims that the FTC violated 5 U.S.C. § 706(2)(A) or (D)
when it promulgated the Rule.

                     III. CONCLUSION

     For the reasons set forth above, we affirm the judgment
of the District Court.
                                                  So ordered.
