On August 1, 2025, a federal judge in Texas largely denied motions to dismiss filed by three of the world’s largest asset managers—BlackRock, Vanguard, and State Street—in a high-profile antitrust case brought by twelve Republican state attorneys general.[1] The states allege that the managers conspired to suppress U.S. coal output and raise energy prices in violation of federal and state antitrust laws. The court ruled that the states had sufficiently alleged violations under the federal antitrust laws and certain state consumer protection statutes, allowing the case to proceed.
Background: Climate Initiatives and Alleged Collusion
At the heart of the lawsuit are climate-focused commitments made by the investment managers through widely publicized ESG (Environmental, Social, and Governance) initiatives. The states allege that these firms leveraged their substantial shareholdings—reportedly between 24% and 34% collectively across seven of the largest U.S. coal companies—to coordinate actions that ultimately reduced domestic coal output. According to the complaint, these actions resulted in a roughly 18–19% decline in coal production between 2019 and 2022, while average coal prices increased by 21–25%.
The states contend that the managers coordinated pressure on coal companies—through proxy voting and shareholder engagement—that went far beyond permissible passive investment and constituted concerted anticompetitive conduct.
The Court’s Ruling
In a detailed opinion, the Texas federal court rejected most of the managers’ arguments, finding that the states plausibly alleged anticompetitive conduct:
- The firms publicly committed to climate initiatives that included pledges to take “necessary action on climate change” and reduce greenhouse gas emissions, including through net-zero targets.
- They allegedly followed through on these commitments by voting against directors at coal companies that lacked adequate climate disclosures or by directly engaging company leadership.
- These actions, according to the states, contributed to coordinated reductions in coal output and corresponding price increases.
The court summarized its conclusion as follows:
Defendants publicly joined climate initiatives and pledged their assets to climate-based goals that necessarily resulted in the reduction of coal output, publicly proclaimed their intent to further these goals, and then used proxy votes or otherwise engaged with the coal companies in furtherance of those climate-based goals.
The ruling also cited with approval a joint statement filed by the U.S. Department of Justice and Federal Trade Commission, which reaffirmed that passive investors may engage in typical governance discussions, but where they act to “substantially lessen competition”—such as through voting and shareholder influence—they may be liable under federal antitrust laws.[2]
Conspiracy Allegations: A “Close Call”
The court also allowed the conspiracy claims to proceed, though it acknowledged that the issue was “a close call.” The states allege that the firms jointly pressured coal companies by joining similar climate initiatives around the same time and sharing both “moral” and “economic” motivations. While the court noted the absence of direct evidence of collusion, it found that the allegations of parallel conduct, timing, and motive were sufficient—at the pleading stage—to plausibly infer an agreement.
Consumer Protection Claims Against BlackRock
The court further sustained certain state consumer protection claims against BlackRock. The states allege that BlackRock misled consumers by marketing certain funds as not following an ESG strategy, while allegedly using shares in those funds to pursue ESG-related objectives. These claims will also proceed to discovery.
Reaction from the Parties
Reactions to the ruling fell along predictable lines. Texas Attorney General Ken Paxton called the decision a “major victory,” claiming that: ”BlackRock, State Street, and Vanguard—three of the most powerful financial corporations in the world—created an investment cartel to illegally control national energy markets and squeeze more money out of hardworking Americans.”
BlackRock disparaged the case as “based on an absurd theory that coal companies conspired with their shareholders to reduce coal production.” State Street issued a similar statement, calling the suit “baseless and without merit” and warning that it promotes “a new and dangerous antitrust theory” that threatens investors and energy markets.
Next Steps: Discovery and Proof
While the court allowed the case to proceed, it acknowledged the significant burden on the states to prove their claims. The opinion noted that the plaintiffs “may ultimately be unable to prove their claim that the asset managers used their stock holdings to decrease coal output,” or that the defendants “entered into an agreement to pressure the coal companies that led to anticompetitive effects in the relevant coal markets.” It also emphasized that the states “lack direct evidence of a conspiracy,” and that the circumstantial case was “a close call,” as noted above.
Implications for Institutional Investors
The ruling highlights escalating regulatory and legal scrutiny of institutional investors’ influence in concentrated industries. While DOJ and FTC guidance continues to affirm that passive investment is permissible, this case signals a willingness to challenge conduct where ownership stakes—combined with coordinated actions—may be seen as distorting competition. Institutional investors operating in sectors marked by common ownership and ESG alignment should closely monitor this litigation and related enforcement trends.
[1] The states of Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia, and Wyoming have signed on to the lawsuit with Texas and have included various state violations of antitrust laws and deceptive marketing practices among their claims.
[2] Early this summer, we wrote about the DOJ and FTC jointly filing a Statement of Interest in the lawsuit, marking the first time federal antitrust authorities have formally raised concerns about the implications of common ownership—where institutional investors hold stakes in competing firms—on market competition.