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, two sources familiar with the matter told Reuters.
The Justice Department 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 US coal companies to discourage competition.
The agencies 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.
“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 in their court brief.
BlackRock said that forcing asset managers to divest from coal companies would harm the companies’ access to capital and likely raise energy prices.
State Street said it acts in the long-term interests of investors and that the lawsuit is baseless.
Vanguard reiterated its prior comment that it would defend its history of safeguarding returns for investors.
Reuters first reported earlier on Thursday that the agencies were expected to support the states’ arguments. The development marks a political setback for the top asset managers.
With some $27 trillion among them, BlackRock, Vanguard and State Street have come under fire from conservative Republicans, many from energy-producing states, who say the firms wrongly put environmental and social concerns above maximizing returns for their customers.
BlackRock, for instance, faces restrictions and outright bans on managing public assets in states including Texas and Indiana over its ESG policies.
There were signs of thawing relations in February when the company led a consortium to buy ports near the strategic Panama Canal, a deal hailed by President Trump.
The asset managers have called the case “half-baked” and say there is no evidence they pressed for reduced output. US District Judge Jeremy Kernodle is scheduled to hear arguments on the asset managers’ bid to dismiss the case in June.
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