DOJ and FTC File Statement of Interest Supporting Antitrust Lawsuit Against Asset Managers’ Climate Goals

On May 22, 2025, the U.S. Department of Justice and the Federal Trade Commission (the “U.S. Antitrust Agencies”) filed a Statement of Interest supporting thirteen states’ claims that asset managers violated antitrust and consumer protection law through their environmental, social, and governance (“ESG”) activities. The Statement, which opposes the asset managers’ motion to dismiss the antitrust claims, indicates the federal antitrust agencies support antitrust theories favored by anti-ESG activists, which may lead to federal investigations and lawsuits based on such theories.

There have been several high-profile state and Congressional investigations in the past few years as part of a “backlash” movement seeking to chill investment decisions influenced by ESG considerations, in part by increasing the perceived risk of antitrust liability. The states’ antitrust lawsuit and now the supporting Statement by the U.S. Antitrust Agencies represent significant escalations of this effort, making it all the more important that sustainability efforts integrate antitrust compliance considerations and take steps to recognize and mitigate antitrust risks that could arise in these areas.

The States’ Lawsuit Claims Investors Violated Antitrust and Unfair Competition Laws

In November of 2024, a coalition of thirteen states filed a lawsuit against three of the world’s largest asset managers alleging that their sustainability policies and climate goals, along with their substantial combined shareholdings and investor activism in publicly-owned U.S. coal companies, violated antitrust laws and certain states’ unfair competition laws in several ways: (1) violations of Section 7 of the Clayton Act, which prohibits mergers that substantially lessen competition; (2) an unlawful conspiracy to reduce coal output or an agreement having that anticompetitive effect; (3) an agreement to share information having the same effect; and (4) investor or consumer deception regarding ESG activities.

The asset managers moved to dismiss the antitrust claims in March, arguing primarily that (1) their acquisitions of shares in target companies fell within the “solely for investment” exception of the Clayton Act and did not substantially lessen competition, and (2) the states’ allegations did not support the plausible inference of either an agreement or competitive harm.

The U.S. Antitrust Agencies Adopt Anti-ESG Characterizations of the Issues, Suggesting They Favor Enforcement in the Area

Much of the U.S. Antitrust Agencies’ Statement concerns specific legal defenses asserted by the asset managers, but it also appears to endorse generally the States’ legal theories and characterizations of the issues. The Statement begins by emphasizing the importance of the energy sector and the Presidential declaration of a “national energy emergency.” In that context, it describes the States’ allegations as presenting “precisely the sort of conduct, including concerted efforts to reduce output, which have long been condemned under the antitrust laws.”

Perhaps most importantly, the Statement rejects sustainability considerations as “not a defense under the antitrust laws,” explaining “‘social justifications proffered for [a] restraint of trade … do not make it any less unlawful.’” This framing, favored by anti-ESG activists, is significant: While the law recognizes that public interest benefits are not a “defense” for a per se unlawful agreement to reduce competition, see Nat’l Soc’y of Pro. Eng’rs v. United States, 435 U.S. 679, 681, 692-96 (1978); FTC v. Super. Ct. Trial Lawyers Assn., 493 U.S. 411, 421-25 (1990), it also distinguishes such an agreement from the coordinated application of standards that serve pro-competitive purposes, but which might have the effect of reducing output for products that fail the standard, see Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500-01 (1988). FTC leadership has previously signaled interest in investigating “collusion” in pursuit of environmental goals, and the U.S. Antitrust Agencies’ Statement suggests their view of the relevant issues may inspire federal antitrust enforcement in the area.

The U.S. Antitrust Agencies’ Legal Arguments Challenge Bright-Line Defenses

Most of the U.S. Antitrust Agencies’ Statement challenges particular legal arguments made by the asset managers and amici, particularly regarding the Section 7 merger control claim. For example, it stresses that post-acquisition uses of shareholdings to significantly influence management of a firm or otherwise lessen competition make the “solely for investment” defense inapplicable even if the shares were originally acquired solely for investment.

Notably, the Statement charts a middle course as to one controversial legal issue that has inspired multiple amici briefs: the so-called “horizontal” or “common” ownership theory by which one or more investors’ non-controlling investments in multiple competing companies may harm competition. The Statement avoids advocating a bright-line or “structural” restriction on such investments but stresses that Section 7 nonetheless forbids such horizontal shareholders from “us[ing] their shares in fact to stifle competition among their commonly held companies.”

Just as notably, the Statement recognizes that shareholder pressure to exit a market in favor of more profitable alternatives may reduce output in that market without reducing competition. It distinguishes this, however, from the asset managers having allegedly “agreed to use their combined shares in competing coal companies to reduce production of coal.” This distinction brings into focus that the content of the supposed agreement – to reduce coal output or merely to apply climate-related standards – is critical even to the Section 7 analysis.

With respect to the output-restriction conspiracy claim, the Statement stresses that an agreement or conspiracy can be formed in many ways without an express exchange of covenants, and it asserts that “a common corporate engagement plan creating restrictions on the portfolio companies’ separate and competing businesses could satisfy” this requirement.

Companies Should Take Practical Steps to Recognize and Mitigate Risk

The U.S. Antitrust Agencies’ support for the states’ anti-ESG antitrust lawsuit underscores the importance of embedding effective antitrust compliance into ESG and sustainability activities. As further detailed in a prior client alert and ABA Section of Environment, Energy and Resources’ Trends article, practical steps to recognize and mitigate risk include:

1. Ensure antitrust compliance programs cover sustainability efforts and ESG policies.
2. Look to non-U.S. jurisdictions’ guidance on sustainability and competition law – with caution.
3. Identify the activities that ESG or sustainability efforts may restrict, against whom one competes through those activities, and whether restricting them disadvantages collaborators’ competitors.
4. Ensure collective standard-setting does not serve exclusionary purposes.
5. Carefully consider and substantiate the pro-competitive reasons for adopting sustainability goals.
6. Ensure any restriction on competitive activity goes no further than reasonably necessary to achieve pro-competitive benefits.
7. Take particular care in highly concentrated markets and those where a firm has a dominant position.
8. Emphasize to non-practitioners that unfamiliarity with antitrust or competition law and the lack of illegal or anticompetitive intent are not defenses.

Crowell’s ESG and Antitrust lawyers are tracking these developments closely, as well as other ESG-related actions, and are prepared to assist in navigating the growing and evolving ESG landscape.