This Joint Statement strongly endorses the Texas-led lawsuit. The Joint Statement further affirms that asset managers and institutional investors may be held liable under Section 7 of the Clayton Act when they use their stock holdings in multiple competitors to achieve anticompetitive outcomes. The Joint Statement signals further potential enforcement on the horizon. The agencies urged the district court to reject several of the arguments advanced by the asset managers in their dismissal motion, including that the alleged conduct falls under a safe harbor exemption for passive investors.
Key takeaways
- By filing this Joint Statement, the FTC and DOJ signal an interest in environmental, social, and governance (ESG) policies. These types of cases were pursued under the first Trump administration, and it appears ESG could be a focus of this U.S. administration as well.
- This lawsuit, now joined by both U.S. federal competition enforcement agencies, raises the stakes for the case that will test how freely Asset Managers may act with the wealth they manage for investors.
- The FTC and DOJ re-affirm their interest in promoting competition in America’s energy markets as a top priority of the U.S. Administration under Trump.
- Shareholders who abandon passive investment strategies and bring about a substantial lessening of competition will likely no longer enjoy a safe harbor under Section 7 of the Clayton Act.
In more detail
Case Background
In November of 2024, Texas Attorney General Ken Paxton announced the launch of a lawsuit against three large investment companies, joined by 10 other states. The lawsuit alleges that the Asset Managers artificially reduced output of the U.S. coal in violation of U.S. antitrust laws. The Complaint notes that Defendants collectively hold substantial shares in major coal companies, including more than 30% stakes in two Midwest mining companies, which together account for approximately 30% of the coal produced in the U.S. With these large holdings in place, the suit alleges that the firms violated the Clayton Act, which prohibits the acquisition of shares of companies in which “the effect of such acquisition may be substantially to lessen competition.”3
The Complaint details how the Asset Managers used the influence of their ownership shares in U.S. coal companies to reduce production in the relevant coal markets—dramatically increasing the price of coal. These actions occurred while privately held coal companies, in which Defendants have no ownership stake, scrambled to increase production and capture larger market shares.4
The Complaint identified two relevant product markets. First, the market for South Powder River Basin Coal. Defendants own 30.43%, 34.19%, and 32.87% of the three publicly traded companies that produce South Powder River Basin Coal. Those companies control 63.5% of this relevant market. Second, the market for Thermal Coal. Defendants own between 8.3% and 34.19% of the eight publicly traded companies that produce Thermal Coal. These companies control 46% of the market in Thermal Coal. Plaintiff States allege that each Defendant’s ownership of the Coal Companies creates the sort of anticompetitive arrangement that Section 7 forbids.
The Arguments of the Joint Statement
The Joint Statement supports the Texas-led lawsuit and criticizes the arguments of both the Defendants and the amici in the case. It takes aim at a number of the dismissal arguments asserted by Defendants.
First, the Joint Statement refutes that the Fund Manager’s investments are protected by the "solely for investment" exemption in Section 7 of the Clayton Act. The DOJ and FTC argue that Plaintiff States have alleged conduct far beyond mere investment—that any investment or ownership stake have been used to lessen or harm competition—which is not protected by any exemption. The Joint Statement explains that allegations in this case, that the Asset Managers used their investments to influence or pressure management of the target firms to reduce production, create conduct fully subject to Section 7.
Second, the Joint Statement argues that minority stakes in companies are still not subject to antitrust scrutiny because they allow the Asset Managers to influence business decisions. The Joint Statement further argues that plaintiffs do not need to link competitive harm to specific stock acquisitions, as argued by Defendants in the case. As such, the scope of Section 7 is not merely limited to controlling interests in companies.
Third, the Joint Statement provides assurances that these legal interpretations of Section 7 do not inhibit beneficial practices like passive investing and corporate governance. The DOJ and FTC clarify that they are not seeking to interfere with typical asset manager behavior.
Fourth, the DOJ and FTC explain the general principle that concerted action subject to antitrust scrutiny includes arrangements, including invitations to participate in a plan, that can establish an unlawful conspiracy under the Sherman Act. This applies even where there is no explicit prior agreement but where an invitation contemplates concerted action and where the Defendants' behavior demonstrates acceptance. The Joint Statement notes that good intentions, such as environmental or climate protection, do not validate concerted anticompetitive behavior like the output restrictions alleged in this case.
Finally, the Joint Statement refutes the Defendants' position that increases in coal production are a defense from the alleged behavior. The relevant test is whether the concerted behavior resulted in production that was lower than it would otherwise would have been—likely resulting in higher prices than the but-for world where the anticompetitive conduct did not occur.
Significance of the Joint Statement
Companies were already on notice that there has been an interest by the U.S. Administration under Trump on ESG. This Joint Statement is an indication of potential future enforcement, and could embolden private litigants to bring more anticompetitive ESG claims across the country. The Joint Statement also highlights the importance of the energy sector for the U.S. Administration. "The President has declared a national energy emergency, and we need competition in coal production now more than ever to help fuel American energy dominance," said Assistant Attorney General Abigail Slater.5 The Antitrust Division's leader declared in her public statement: "We will not hesitate to stand up against powerful financial firms that use Americans' retirement savings to harm competition under the guise of ESG."6
The FTC and DOJ clarify the applicability of the Clayton Act to investment behavior that is taken to lessen competition or result in anticompetitive harm. Here, the agencies are concerned about conduct in the energy sector that reduces the production of domestic energy, raises energy prices for consumers and businesses, and undermines America's energy dominance.7
This Joint Statement, along with subsequent public statements by FTC and DOJ leadership, indicates potential changes in enforcement action by the U.S. Administration within the energy sector as well as wealth management companies that focus on ESG policies. Safe harbor exceptions may also be subject to further scrutiny.
1 See Texas et al. v. BlackRock, Inc., Case No. 6:24-cv-00437-JDK, (E.D.Tex. May 22, 2025), ECF No. 99.
2 See Justice Department and Federal Trade Commission File Statement of Interest on Anticompetitive Uses of Common Shareholdings to Discourage Coal Production, DOJ Press Release, (May 22, 2025), available at: https://www.justice.gov/opa/pr/justice-department-and-federal-trade-commission-file-statement-interest-anticompetitive-uses.
3 See Texas et al. v. BlackRock, Inc., Case No. 6:24-cv-00437-JDK, (E.D.Tex. Nov. 27, 2024), ECF No. 1 (“Complaint”); 15 U.S.C. § 18.
4 Complaint at ¶ 225.
5 See DOJ Press Release, (May 22, 2025).
6 Id.
7 Complaint at 1.
