BlackRock, Vanguard, State Street Fail to Dismiss Coal Antitrust Case

BlackRock, Vanguard, and State Street's motion to dismiss an antitrust lawsuit brought by Texas and nine other states was denied by a federal judge. The lawsuit alleges that the asset managers conspired to constrict coal production through their public holdings and engagements. The judge rejected the motion to dismiss, saying the allegations were plausible and allowed the case to proceed.

A federal judge in Texas has denied a motion to dismiss an antitrust lawsuit filed by Texas and nine other states against BlackRock, Vanguard, and State Street. The lawsuit alleges that the three asset managers conspired to constrict coal production through their public holdings and engagements. The judge ruled that the allegations are plausible and allowed the case to proceed.

The lawsuit, filed in December 2024, alleges that the asset managers formed a cartel to rig the coal market and conspired to artificially constrict the coal market. The judge, U.S. District Court Judge Jeremy Kernodle, denied the motion to dismiss, stating that the allegations are plausible and that the case can proceed [1].

The case revolves around the asset managers' commitments under climate alliances like the Net Zero Asset Managers initiative and Climate Action 100+. The judge noted that while the asset managers' choices to join these initiatives "announces a commitment to the public, it is not necessarily a commitment by Defendants to each other" [1].

The ruling comes as a significant victory for the states, who allege that the asset managers' actions have led to higher utility bills and costs for American consumers. The judge also dismissed three state-level consumer protection suits against BlackRock, two from Louisiana and one from Nebraska [1].

In response to the ruling, Texas Attorney General Ken Paxton accused the asset managers of forming "an investment cartel to illegally control national energy markets" and said that the court's decision represents a major step in holding them accountable [1].

The ruling also highlights the potential implications of environmental, social, and governance (ESG) investing for antitrust laws. The judge noted that while passive investing and corporate governance-focused shareholder advocacy are allowed under antitrust laws, the asset managers' actions may have gone beyond these bounds [1].

The asset managers have expressed their intention to vigorously defend against the plaintiffs' claims. BlackRock, for instance, stated that the case is "based on an absurd theory that coal companies conspired with their shareholders to reduce coal production" and that it will demonstrate that the case is not supported by the facts [1].

The ruling is significant as it allows the coalition of states to proceed with claims that the asset managers coordinated with one another to pressure publicly traded coal companies to reduce output [3]. This decision could have broader implications for ESG investing and shareholder activism in the future.

References:
[1] https://www.esgdive.com/news/blackrock-vanguard-state-street-motion-to-dismiss-coal-antitrust-case-denied-texas-ag/757336/
[2] https://www.okenergytoday.com/2025/08/blackrock-loses-bid-to-have-esg-lawsuits-by-oklahoma-texas-and-other-states-thrown-out-of-federal-court/
[3] https://www.clearymawatch.com/2025/08/shareholder-engagement-considerations-in-light-of-texas-v-blackrock/