US supports Republican states' argument in BlackRock climate case

Yahoo

23-05-2025

By Jody Godoy and Ross Kerber
(Reuters) -U.S. federal antitrust enforcers expressed support on Thursday for arguments wielded by Republican states that accuse asset managers BlackRock, Vanguard and State Street of conspiring through climate activism to decrease coal output.
The U.S. Department of Justice and Federal Trade Commission filed a statement of interest in the case where Texas and 12 other states claim the companies used their substantial holdings in U.S. coal companies to discourage competition.
The entry of the federal officials raises the stakes for the case that tests how freely the three fund firms may act with the combined $27 trillion they manage for investors.
The companies have denied wrongdoing and called the case "half-baked." In recent years, they have reduced their focus on climate and social issues while maintaining substantial investments in fossil fuel companies.
Nonetheless, the agencies on Thursday urged the judge overseeing the case in Tyler, Texas, to reject several of the arguments the asset managers made in their bid to dismiss the case, including that the alleged conduct falls under an exemption for passive investors.
In their court brief, the agencies cited allegations the fund firms' conduct raised U.S. energy prices. "This case is about precisely the sort of conduct, including concerted efforts to reduce output, which have long been condemned under the antitrust laws," the agencies said.
Assistant Attorney General Gail Slater, who leads the DOJ's antitrust division, and FTC Chairman Andrew Ferguson said in statements that competition in coal is important to U.S. President Donald Trump's goal of American energy dominance.
BlackRock said that forcing asset managers to divest from coal companies -- one outcome sought by the state plaintiffs -- would harm the companies' access to capital and likely raise energy prices.
"The DOJ and FTC's support for this baseless case undermines the Trump Administration's goal of American energy independence," BlackRock said.
State Street said it acts in the long-term interests of investors and called the lawsuit "baseless."
Vanguard reiterated its prior comment that it would defend its history of safeguarding returns for investors.
The Investment Company Institute, an industry trade group, said it was "very troubled by the implications of the specious arguments" in the filing in support of the suit the group said risks major problems for funds, investors and energy companies. The agencies, the ICI said, are "pushing an expansive reading of antitrust law that would chill ordinary investment activity."
Reuters first reported earlier on Thursday that the agencies were expected to support the states' arguments.The development marks a political setback for the three managers, already under fire from conservative Republicans, many from energy-producing states.
There were signs of thawing relations in February when BlackRock led a consortium to buy ports near the strategic Panama Canal, a deal hailed by Trump. In addition, U.S. energy regulators in April renewed BlackRock's permission to own major stakes in public utility companies.
U.S. District Judge Jeremy Kernodle is scheduled to hear arguments on the asset managers' bid to dismiss the case in June.