On August 1, 2025, the United States District Court for the Eastern District of Texas denied the motions to dismiss filed by three asset managers. The complaint, brought by thirteen plaintiff states (Texas, Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, Louisiana, Oklahoma, West Virginia, and Wyoming) and supported by a joint DOJ/FTC statement of interest, alleges that defendants used ownership interests in major coal companies to limit coal production in furtherance of environmental stewardship and concern for the climate. Defendants moved to dismiss the complaint on grounds, inter alia, that: (i) plaintiffs failed to allege “lessening of competition” as required by Clayton Act §7; (ii) defendants are “passive investors” protected by the safe-harbor provision in Clayton Act §7; and (iii) plaintiffs failed to allege concerted action as required by Sherman Act §1. In what was the first significant test of the states’ long-running theory that asset managers and banks’ commitment to decarbonization initiatives violated antitrust laws, the district court denied defendants’ motion to dismiss all antitrust claims.
According to plaintiffs, defendants amassed significant minority stakes—often 25% to 35% collectively—in major publicly traded domestic coal producers. At the same time, the complaint alleges that defendants joined and committed to further the goals of high-profile “climate initiatives” such as the Net Zero Asset Managers Initiative (“NZAM”) and Climate Action 100+ (“CA100”). Defendants allegedly leveraged their collective coal producer ownership interests to mount internal pressure campaigns for the purpose of curtailing coal production in the name of achieving “net-zero” greenhouse-gas emissions. Plaintiffs allege that the resulting coal output reductions had driven up the price of South Powder River Basin (“SPRB”) coal and thermal coal, inflating electricity costs for consumers, on the one hand, while boosting defendants’ asset-management fees and profits on the other.
Plaintiffs asserted that defendants’ actions violate Clayton Act §7 (prohibits mergers and acquisitions that may substantially lessen competition) and Sherman Act §1 (prohibits contracts, combinations, or conspiracies in restraint of trade), among other state antitrust and consumer protection laws. First, plaintiffs alleged a “horizontal shareholding” claim, whereby defendants unlawfully acquired and used stock in violation of Clayton Act §7. Plaintiffs contend that defendants’ aggregate minority ownership interests gave them sufficient leverage to influence coal-company behavior and artificially depress coal output. While no court has ever endorsed a novel “horizontal shareholding” claim, which occurs when a relatively small number of investors acquire large overlapping ownership interests in multiple companies, the district court indicated it was willing to consider the claim by reasoning that “serious academic scholarship seems to agree” to its viability under Clayton Act §7.
Second, plaintiffs alleged that defendants, by collectively (i) committing to NZAM and CA100, (ii) demanding targets for lower emissions, and (iii) initiating proxy-voting against directors who resisted lower emissions targets, entered into an unlawful agreement to depress coal output and to require disclosure of competitively sensitive future-production data in violation of Sherman Act §1. Plaintiffs bolstered these theories with alleged “plus factors,” noting that defendants’ membership in the climate initiatives coincided with declines in coal output (18–19%) and increases in coal prices (21–25%) between 2019 and 2022.
In their motion to dismiss, defendants first asserted that a passive investor safe harbor shields minority stockholdings from antitrust claims under Clayton Act §7. Defendants claimed that they neither sought control nor acted inconsistently with ordinary governance practices. Rather, defendants characterized NZAM and CA100 as mere “trade associations” and label the complaint’s reliance on parallel conduct as impermissible speculation under Twombly. Additionally, defendants contended that plaintiffs failed to sufficiently allege competitive harm as required by Clayton Act §7. Defendants contested the 2019–2022 timeframe as cherry-picked and not indicative of broader or more recent trends, when, according to defendants, output has steadily increased over the last several years. Lastly, relating to plaintiffs’ Sherman Act §1 claim, defendants maintain that any price or output shifts stem from long-term market trends—COVID-19 disruption, declining coal demand, and increased natural-gas competition—rather than concerted action.
The district court rejected defendants’ arguments. First, the district court rejected the Clayton Act §7 passive investor safe harbor because defendants actively used stock through proxy voting or engaging directly with coal companies, after joining climate initiatives, committing to goals that would reduce the output of coal, and making public statements supporting and furthering these goals. Next, the district court found that Plaintiffs plausibly alleged competitive harm in violation of Clayton Act §7. The district court noted that, but for defendants’ alleged anticompetitive conduct, public coal companies may have increased production to capitalize on rising prices, as privately held coal producers did. The district court emphasized that defendants’ collective ownership stakes and coordinated stewardship activities plausibly influenced the coal companies’ decisions to restrain output. Further, the district court noted that the proper timeframe for evaluating coal market trends is a factual dispute that cannot be decided at the motion to dismiss stage. Lastly, the district court found that plaintiffs plausibly alleged anticompetitive harm by showing both increased prices and decreased output in the relevant coal markets, which are classic indicators of competitive harm to competition in assessing Sherman Act §1 claims. Moreover, the district court held Plaintiffs pleaded sufficient circumstantial evidence—parallel initiative membership, synchronized statements, and coordinated proxy-voting—to raise a reasonable inference of concerted action under Sherman Act §1.
The district court denied the motion to dismiss for all federal and state antitrust claims, although it granted dismissal of three state consumer-protection claims.
While the states bringing this action initiated several similar and highly-publicized investigations since at least 2022, this complaint was an unprecedented antitrust challenge to the stewardship of asset managers. The district court’s decision has validated the states’ theory, which, at its core, attempts to find anticompetitive conduct and antitrust harm from activist management by minority investors and participation in widespread climate initiatives, and the states may now rely on the decision to bring similar challenges against additional asset managers and banks.
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