On May 22, 2025, the Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust Division (DOJ) filed a Statement of Interest in a case brought by eleven Republican-led States against three major institutional investors: BlackRock, Inc., State Street Corp. and The Vanguard Group, Inc (Big Three). The plaintiffs allege that the Big Three artificially constricted the market for coal by acquiring minority interests in all prominent publicly traded U.S. coal companies and collectively reducing coal output as a part of various ESG-related commitments. The Statement of Interest highlights the risk to private equity firms and other “passive” investors of coordinating conduct among competing investments–particularly if that conduct runs afoul of the Trump Administration’s policy goals.

Background

Filed in late 2024, the Complaint alleges that for several years, BlackRock, State Street and Vanguard each acquired substantial holdings in every significant, publicly held U.S. coal company and thereafter used their combined influence to artificially constrict the market and reduce coal output. These actions allegedly were taken to reduce fossil fuels and greenhouse emissions. None of the Big Three holds a controlling stake in any of the coal companies. Nonetheless, the plaintiff States contend that the investment managers engaged in concerted behavior that resulted in higher prices to consumers and “cartel-level” revenues and profits.

The States specifically highlight the Big Three’s membership in the Net Zero Asset Managers initiative and Climate Action 100+ ESG initiatives, which promote adherence to investment agendas that phase out investments in fossil fuels. The States maintain that the investment managers shared information concerning their output targets, as well as the success of those efforts, as part of a hub-and-spoke conspiracy.

The States bring claims under Section 7 of the Clayton Act as well as other federal and state antitrust and deceptive trade practice laws. Section 7 prohibits transactions that “substantially lessen competition,” including acquisitions of “any part” of a company’s stock. However, stock acquisitions that are made “solely for investment” and are not used “by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition” are exempted from liability.

Due to this exception, institutional investments have not historically come under antitrust scrutiny. Indeed, BlackRock is the first instance in which regulators have attempted to bring Section 7 claims based on investment firms’ acquisitions of less than a controlling stake in multiple competing portfolio companies.

The defendant investment firms moved to dismiss the complaint, calling the States’ theory “farfetched.” The firms highlight that none of them have a controlling stake in any coal company, that coal output actually increased, and that the ESG initiatives were not an illegal agreement. Further, they argue that Section 7 does not and should not reach them as passive, minority investors.

The court set a hearing on the motion to dismiss for June 9, 2025. SIFMA and ICI have filed amicus briefs in support of the Big Three, while the FTC and DOJ filed a recent Statement of Interest aligned with the States.

FTC/DOJ Statement of Interest

The Statement of Interest focuses on the contours of the investment exception to the Clayton Act, arguing that “even initially passive investors can take themselves out of the exception by using or attempting to use their stock investments in multiple competitors to harm competition.” The agencies explain that “[p]artial ownership interests in competing firms can increase an investor’s ability and incentive to influence competing companies’ conduct” and that “an investor violates Section 7 when it uses its holdings in competing firms, by voting or otherwise, to injure competition.” Thus, rather than view the investment exception as providing blanket protection from liability for passive investors, the agencies assert it is merely a “carve-out . . .that can be lost depending on how investors use those investments.”

The Statement of Interest also addresses the defendants’ argument that common participation in ESG initiatives does not constitute a “conspiracy” under Section 1 of the Sherman Act. The agencies analogize the common corporate engagement plan alleged in BlackRock to older hub-and-spoke conspiracy cases where identical letters were sent to multiple competing distributors asking them to impose certain restrictions on their output, noting that the letters were being sent to all of them, followed by the competing distributors imposing the requested restrictions. The agencies also assert that “it is irrelevant to the existence of concerted action that the alleged agreements . . . focus on ‘climate’ issues”—even “good motives” are illegal when they deprive the market of independent sources of economic decision making.

The agencies nonetheless reaffirm the 2017 U.S. Submission on Common Ownership to the Organization for Economic Cooperation and Development (OECD Submission), which is committed to protecting the crucial role of asset managers in index investing and corporate governance. The agencies explain that asset managers play a key role because index fund investing is extremely beneficial to consumers and institutional investors can play key roles in ensuring strong corporate governance and oversight. They argue that nothing in this action would pose a barrier to institutional investing, because it targets the specific, limited instance of “holders of competing companies discouraging competition among their investments in a manner that results in harm to consumers or businesses.”

One such category of business, the agencies say, is the coal industry itself. The agencies highlight that President Trump has declared an energy emergency and emphasize the importance of coal to America’s energy security and its potential to support electrical demand for artificial intelligence and resurgence in domestic manufacturing. Just after filing, Gail Slater, who leads the DOJ’s Antitrust Division, posted on X, “we need competition in coal production now more than ever to help fuel American energy dominance,” and “[w]e will not hesitate to stand up against powerful financial firms that use Americans’ retirement savings to harm competition under the guise of ESG.”

Take-Aways

The Statement of Interest has several implications for institutional investors, private equity companies and other companies holding minority interests in competing companies.

• First, the Statement of Interest underscores the risk of facilitating coordinated conduct among competing investment interests, even where less than a controlling stake is held.
• Second, the Statement of Interest is a reminder that even benevolent intentions—such as promoting ESG goals—do not provide an exemption to antitrust laws where collective conduct is involved.
• Third, the Statement of Interest highlights that even absent an express agreement, investors’ attempts to persuade each competing investment to undertake common conduct can give rise to allegations an antitrust conspiracy.
• Finally, the Statement of Interest suggests that the federal government will not tolerate activist activity on the part of institutional investors that runs contrary to the Trump administration’s policy goals and will use its antitrust authority to thwart such activity, particularly where there is evidence of coordinated activity.

Investors holding interests in competing companies—even less than controlling interests—should consult with antitrust counsel before taking action that could be viewed as inducing their investments to take common action.

For more information on this topic, please contact a member of our Antitrust team.