Federal Antitrust Agencies Back Allegations Against Asset Managers
On Thursday, federal antitrust regulators voiced their support for claims by several Republican-led states. They have accused major property managers—BlackRock, Vanguard, and State Street—of allegedly colluding to cut down coal production via climate-related actions, according to two sources who are aware of the situation.
The Department of Justice and the Federal Trade Commission submitted statements of interest in response to a lawsuit brought by Texas and twelve other states. These states argue that these firms are using their significant investments in U.S. coal companies to stifle competition.
The agencies urged the judge overseeing the case in Tyler, Texas, to dismiss certain defenses put forth by the asset managers.
“This case revolves around a coordinated effort that aims to reduce output, which has been criticized under the Antimonopoly Act for quite some time,” the agency noted in its court overview.
BlackRock argued that compelling asset managers to divest from coal companies could restrict their access to capital and lead to soaring energy prices.
State Street maintained it was acting in the best interests of its investors, labeling the lawsuit as baseless.
Vanguard reiterated its stance, stressing a commitment to safeguarding investors’ returns.
According to a report from Reuters, the agencies’ endorsement of the states’ claims represents a significant political hurdle for leading asset managers. Collectively, these firms manage about $27 trillion, and many conservatives believe they have prioritized environmental and social issues over maximizing returns from energy sectors.
There are ongoing restrictions and outright bans on how BlackRock manages state public assets in certain states, including Texas and Indiana, due to their ESG policies.
In February, it was reported that BlackRock might lead a group to purchase a port near the strategically critical Panama Canal.
The firm has branded the case as “ludicrous,” asserting there’s no proof that output has declined. U.S. District Judge Jeremy Carnodol is set to examine the property managers’ attempt to dismiss the case in June.
