BlackRock, Vanguard, and State Street Seek Dismissal of U.S. Antitrust Lawsuit

BlackRock (BLK.N), Vanguard, and State Street (STT.N) have petitioned a Texas court to dismiss a lawsuit filed by multiple U.S. states accusing them of engaging in antitrust violations aimed at reducing coal production.

The asset management giants argue that the allegations presented are based on “half-baked and untested” legal theories that would require an unprecedented reinterpretation of antitrust law, Reuters reported.

The lawsuit, spearheaded by the Texas state government and joined by ten other Republican-led states, claims that the three firms colluded through climate activism efforts to suppress coal production, thereby contributing to increased energy prices. The plaintiffs argue that the firms’ involvement in industry net-zero groups constitutes unlawful cooperation in restricting market competition.

However, in their legal response, BlackRock, Vanguard, and State Street refute these claims, stating that the complaint fails to provide any concrete evidence of them directing coal companies to limit output. They further assert that their investment strategies, including their voting power in corporate governance matters, are routine practices fundamental to the operation of index funds. The companies emphasize that these practices facilitate the low-cost investment options that millions of Americans depend on for retirement savings and other financial needs.

Managing over $26 trillion in assets collectively, the three firms have long wielded significant influence in corporate decision-making, particularly in matters related to executive compensation, board elections, and environmental, social, and governance (ESG) policies. This influence has made them a focal point of political scrutiny, particularly from conservative lawmakers representing energy-producing states, who contend that their ESG-focused initiatives constitute coordinated market manipulation.

BlackRock, Vanguard, and State Street have urged the court to dismiss what they describe as an “adventurous attempt to rewrite antitrust law,” arguing that a ruling in favor of the plaintiffs would not only misapply legal principles but also harm coal companies and individual investors alike.

The case, titled Texas et al v. BlackRock Inc et al, is being heard in the U.S. District Court for the Eastern District of Texas under case number 24-00437. The outcome of this lawsuit could have significant implications for the role of asset managers in climate-related corporate governance and broader antitrust enforcement in the financial sector.