The Federal Trade Commission (FTC) and Department of Justice (DOJ) Antitrust Division have filed a Statement of Interest (SOI) supporting a lawsuit brought by a coalition of Republican states alleging that three large investment firms colluded to pressure coal companies to reduce carbon emissions from coal as part of environmental “net zero” goals. Plaintiffs allege that the investment firms leveraged their holdings and voting shares in privately held coal companies to “facilitate an output reduction scheme”, and, as a result, enjoyed supra-competitive “cartel-level” profits for themselves and their portfolios. The FTC and DOJ’s support for plaintiffs in this case indicates that companies should continue to exercise care in entering collaborations with competitors, even in furtherance of environmental, social and governance (ESG) initiatives.
The SOI, coupled with statements from DOJ Assistant Attorney General Gail Slater and FTC Chair Ferguson announcing the filing, is a clear sign that the agencies’ pro-enforcement agenda will include challenges to ESG initiatives and a commitment to boosting the coal industry in the United States.
Republican State AGs spearheaded antitrust enforcement effort targeting corporate ESG initiatives
The closing months of 2024 saw Republican AGs ramp up their focus on ESG initiatives as alleged antitrust violations. Among these initiatives was the November 2024 lawsuit filed in Texas federal court by a coalition of Republican states alleging that three large investment firms “used their management of stock in competing coal companies to induce reductions in output, resulting in higher energy prices for American consumers.”1 The complaint argued that the “Defendants’ belief that concern for the climate confers a license to suppress competition is ‘mistaken,’” and dismissed the defendants’ effort to “publicly defend[] their anticompetitive scheme with appeals to environmental stewardship.”2 The complaint also alleged violations of the Sherman and Clayton Acts, as well as Texas, Montana, and West Virginia state laws.3
FTC and DOJ argue ESG is no defense under the antitrust laws
In their SOI, the FTC and DOJ argue that the complaint alleges “precisely the sort of conduct, including concerted efforts to reduce output, which have long been condemned under the antitrust laws.”4 The SOI also cites to President Trump’s declaration of a national energy emergency5 in late January 2025, as well as his April 8, 2025 Executive Order calling for “increase[d] domestic energy production, including coal”6, and argues that “[c]oal is vital to America’s energy security and provides a reliable, cost-effective source of energy to support growing electrical demand for artificial intelligence and a resurgence in domestic manufacturing.”7
In a May 22, 2025 press release announcing the filing of the SOI, FTC Chair Ferguson commented that the defendants in the case “allegedly blocked the production of American coal in the name of climate change scaremongering . . .”8 Chair Ferguson also said that the SOI is part of a broader effort to “unleash American energy dominance, protect coal, and stop the left’s attempt to corrupt financial markets with political and social objectives.” AAG Slater echoed these sentiments, stating that DOJ will “not hesitate to stand up against powerful financial firms that use Americans’ retirement savings to harm competition under the guise of ESG.”9 Specifically, the SOI makes the argument that even though alleged conduct “may have furthered Defendants’ climate objectives”, this does not constitute a defense under the antitrust laws . . . Carbon reduction is no more a defense to the conduct alleged here than it would be to price fixing among airlines that reduced the number of carbon-emitting flights.”10
Looking ahead
Earlier this year we discussed how, in President Trump’s second term, Republican state antitrust enforcement could serve as a roadmap for the Republican-led DOJ and FTC to use the antitrust laws to advance the Administration’s policy agenda. The FTC and DOJ’s support for the Republican State AGs’ use of the antitrust laws to target climate agreements makes clear that companies should exercise caution in entering into collaborations in furtherance of ESG goals. This may create tension in cross-border agreements involving jurisdictions operating under a more permissive competition enforcement regime with respect to ESG collaborations and sustainability cooperation.
References
1 Department of Justice press release, “Justice Department and Federal Trade Commission File Statement of Interest on Anticompetitive Uses of Common Shareholdings to Discourage Coal Production” (May 22, 2025) available here (hereafter “DOJ Press Release”).
2 See Complaint, State of Texas et al. v. Blackrock, Inc. et al., No. 24-cv-437 (E.D. Tex. Nov. 27, 2024), ECF 1 at 2-3. Plaintiffs allege that the investment firms “each publicly announced their commitment to use their shares to pressure the management of all the portfolio companies in which they held assets to align with netzero goals. Those goals included reducing carbon emissions from coal by over 50%. Rather than individually wield their shareholdings to reduce coal output, therefore, Defendants effectively formed a syndicate and agreed to use their collective holdings of publicly traded coal companies to induce industry-wide output reductions.”
3 That lawsuit was filed just over a year after 21 Republican state attorneys general sent a letter in September 2023 to signatories of the Net Zero Financial Services Provider Alliance (NZFSPA), warning that “your joint commitments under the NZFSPA may run afoul of United States antitrust law and its state equivalents,” and alleging that, although NZFSPA signatories are “direct competitors with each other, they nevertheless commit to using their market influence to enforce their collective climate agenda in the broader economy . . .” The state AGs’ letter includes a dozen separate requests for information regarding the companies’ NZFSPA commitments.
4 FTC and DOJ SOI at 2-3.
5 See Exec. Order No. 14,156, 90 Fed. Reg. 8433 (Jan. 29, 2025).
6 See Exec. Order No. 14,261, 90 Fed. Reg. 15517 (Apr. 8, 2025).
7 FTC and DOJ SOI at 2.
8 Federal Trade Commission press release, “FTC and DOJ File Statement of Interest in Energy Collusion Case Against BlackRock, State Street, and Vanguard” (May 22, 2025) available here (hereafter “FTC Press Release”).
9 DOJ press release.
10 FTC and DOJ SOI at 3.
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