Common Ownership and Antitrust
FTC and DOJ to support states' action against BlackRock, State Street, and Vanguard
The FTC and DOJ support the states' action accusing BlackRock, State Street, and Vanguard to harm competition as part of climate-related initiatives.
The asset managers collectively own substantial shares in multiple competing coal companies (between 24 and 34 percent of seven of the nine coal companies, with smaller shares in the remaining two).
By acting in concert—through shareholder resolutions, engagement, or other means—they allegedly pressured the management of competing coal companies to obtain their commitment to limit carbon emissions by restricting the production of coal within the United States.
Output reduction can lead to higher prices and reduced consumer welfare, both of which are hallmarks of anticompetitive behavior. Such conduct can be challenged under Section 1 of the Sherman Act (prohibiting agreements that unreasonably restrain trade) and Section 7 of the Clayton Act (addressing mergers or acquisitions that may lessen competition).
Main Arguments:
- The “solely for investment” exemption in Section 7 of the Clayton Act does not provide blanket immunity to asset managers if they use their stock holdings to harm competition
- Control is not required: Minority shareholdings can violate antitrust laws if used to influence competitors’ business decisions in an anticompetitive manner, even without controlling stakes
- The Clayton Act Prohibits the Anticompetitive Use of Minority Interest Acquisitions to Substantially Lessen Competition
- Concerted action under Section 1 of the Sherman Act can be established even without explicit agreements
- Anticompetitive output restraint requires an overall decrease in production: Output can increase but still be restrained below competitive levels, harming competition
Comment: Weaponizing Antitrust or Enforcement?
The lawsuits against asset managers like BlackRock, State Street, and Vanguard—alleging that their climate-related shareholder actions amount to antitrust violations—are widely seen by critics as an attempt to use antitrust law to undermine climate and environmental, social, and governance (ESG) initiatives.
The FTC and DOJ, in their joint statement of interest, emphasize that the case is about the misuse of market power to manipulate energy markets, not about attacking climate goals.
They argue that when institutional investors use their influence across multiple competitors to achieve anticompetitive outcomes—such as restricting output and raising prices—this falls squarely within the scope of antitrust enforcement, regardless of the underlying motivation.
This case applies Section 7 (which focus on prospective harm from mergers) retrospectively to challenge how existing minority shareholdings were used post-acquisition. The agencies argue that post-acquisition conduct can demonstrate that the stock was not held “solely for investment”. The DOJ and FTC cite precedent (e.g., United States v. ITT Continental Baking Co.) affirming that Section 7 applies to stock holdings used anticompetitively, not just their acquisition.
In conclusion, the agencies stop short of condemning common ownership outright and emphasize that conduct—not just structural shareholding—determines antitrust liability. Importantly, the FTC/DOJ’s stance establishes a new enforcement frontier:
using antitrust law to police shareholder conduct.
Honoring Professor Rubinfeld and Rock: “Give to Caesar what is Caesar’s” in the Debate on Common Ownership and Antitrust
Professor Rubinfeld’s scholarship, particularly his work with Edward Rock, has shaped the current discourse by emphasizing that the real antitrust concern is not simply the structure of common ownership, but the conduct it enables.
As they note, “a common owner could be a particularly effective cartel facilitator,” able to transmit anticompetitive signals and coordinate actions between competing firms—even with relatively small ownership stakes. Their nuanced analysis cautions against broad regulatory overreach, instead calling for vigilant scrutiny of specific contexts where shareholder conduct may foster coordinated effects.
This conduct-based perspective is now reflected in the joint statement of interest filed by the FTC and DOJ in the case against BlackRock, Vanguard, and State Street. The agencies draw directly on Rubinfeld and Rock insights, arguing that antitrust enforcement should focus on situations where common owners actively engage in or facilitate anticompetitive coordination, rather than on passive investment alone.