BlackRock, Vanguard, State Street Seek Court To Dismiss US Antitrust Lawsuit

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(RTTNews) - Asset managers BlackRock Inc., Vanguard and State Street Corp. have asked a Texas court to dismiss a U.S. state lawsuit accusing them of conspiring to decrease coal output, Reuters reported.

The companies reportedly said the allegations were half-baked and untested legal theories and asked the court to reject the adventurous attempt to rewrite antitrust law.

The companies were responding to the lawsuit filed in the federal district court for the Eastern District of Texas by Texas and 10 other states, which alleged that the institutional investors colluded to reduce coal output. As per the complaint, these companies violated antitrust law through climate activism by collectively using their shareholdings in domestic coal producers, which reduced coal production and boosted energy prices.

The complaint alleged that the investment managers used their collective power, including through proxy voting, to pressure the coal producers. As per the complaint, the firms also participated in initiatives such as the Net Zero Asset Managers Initiative and Climate Action 100+ as "substantial evidence of a horizontal agreement" to use common ownership to set and enforce output restrictions.

In the lawsuit filed in November 2024, the states contended that the defendants' concerns regarding climate change did not allow them "to turn a blind eye to an illegal deal."

Further, Blackrock is alledged to have had actively deceived shareholders by representing that its non-ESG funds "would be dedicated solely to enhancing shareholder value" while in fact using all of its holdings to advance its climate goals.

In their response, BlackRock, Vanguard and State Street added that the complaint does not offer any example of them ever telling a coal company to reduce output.

They reportedly told the judge, "To find that Plaintiffs have stated an antitrust claim on these alleged facts requires contorting the law in a way that would hurt both coal companies and individual investors."

As per the report, the influential proxy votes of BlackRock, Vanguard and State Street, which together manage more than $26 trillion in assets, have made them major voices in how U.S. corporations pay executives, elect directors and set environmental, social and governance or ESG policies.