11 states are suing three big institutional investors for anti-competitive business practices

Eleven states, led by Texas, sued the world’s three largest institutional investors for allegedly conspiring to buy shares of coal companies to control the market, reduce competition and violate federal antitrust laws and state.

The lawsuit was filed in the United States District Court for the Tyler Division of the Eastern District of Texas and asks for a jury trial. It names as defendants BlackRock, Inc., State Street Corporation and Vanguard Group, Inc., which together manage more than $26 trillion in assets.

The companies were sued for “acquiring substantial shares in every significant public coal producer in the United States” to gain “the power to control coal company policies,” said Texas Attorney General Ken Paxton.

right Summary of 109 pagesdefendants own 30.43% of Peabody Energy, 34.19% of Arch Resources, 10.85% of NACCO Industries, 28.97% of CONSOL Energy, 29.7% of Alpha Metallurgical Resources, 24.94% of Vistra Energy , 8.3% of Warrio Energy, 8.3% of Warrior62. Met Coal and 32.87% of Black Hills Corporation.

Under the Biden administration, for the past four years, “America’s coal producers have responded not to the price signals of the free market, but to the commands of Larry Fink, the chairman and CEO of BlackRock, and his fellow asset managers,” it said in short. states. “As demand for the electricity Americans need to heat their homes and power their businesses has increased, the supply of coal used to generate that electricity has been artificially reduced – and the price has skyrocketed. The defendants reaped the rewards of higher profits, higher taxes and higher profits, while American consumers paid the price with higher utility bills and higher costs.”

Costs to consumers have risen as companies have “weaponized” their actions to push a so-called green energy agenda, including cutting coal production by more than half by 2030, the suit claims. In response, publicly traded coal producers cut output and energy prices skyrocketed.

The companies advanced their policies primarily through two programs, the Climate Action 100 and the Net Zero Asset Managers Initiative, signaling their “mutual intent to reduce thermal coal production, which has predictably raised the cost of electricity for Americans” to nationally, Paxton said.

The firms are also alleged to have defrauded thousands of investors “who chose to invest in non-ESG funds to maximize their returns,” Paxton said. “However, these funds pursued ESG strategies, despite defendants’ representations to the contrary.” While they are alleged to have directly restricted competition among the companies whose stock they acquired, “their war on competition has industry-wide consequences,” the brief said.

“Texas will not tolerate the illegal harmonization of the financial industry in service of a destructive and politicized ‘environmental’ agenda. BlackRock, Vanguard and State Street formed a cartel to manipulate the coal market, artificially reduce energy supplies and drive up prices,” Paxton said. “Their conspiracy harmed American energy production and hurt consumers. This is an egregious violation of state and federal law.”

The lawsuit alleges that the companies’ actions violated the Clayton Act, which prohibits any acquisition of stock where “the effect of such acquisition may be to substantially lessen competition”; and the Sherman Antitrust Act of 1890, 15 USC § 1 in a conspiracy to restrain trade.

It also claims the companies violated state antitrust laws in Texas, Montana and West Virginia; Blackrock also allegedly violated the Texas Business and Commerce Code by committing “false, deceptive or misleading acts.”

It asks the court to rule that the companies have violated federal and state statutes, provide equitable relief, and enjoin them from engaging in such acts. It seeks civil penalties, including ordering Blackrock to pay $10,000 for each violation.

Paxton is joined in the lawsuit by the attorneys general of Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia and Wyoming.

The law firm of Buzbee and Cooper & Kirk are external advisors.

The companies have yet to issue a statement regarding the lawsuit.

The process a submitted one follows of 25 states led by Texas against the Biden administration, asking the court to stop a federal ESG policy that could negatively impact the retirement savings of 152 million Americans.

It also comes after Texas did listed hundreds of publicly traded companies and investment funds, including Blackrock, on its divestment list for promoting ESG and anti-oil and gas policies.