Questioning ESG Commitments, State AGs Raise Antitrust Concerns

In early August 2022, 19 state Attorneys General signed a letter expressing concern that an investment management firm’s ESG efforts might constitute antitrust violations. The letter specifically noted that the ESG initiatives could raise potential antitrust violations such as “[g]roup boycotts, restraining trade, or concerted refusals to deal.”

As we have discussed previously, business activities motivated by ESG priorities are not immune from antitrust enforcement risk. This recent letter offers a reminder on the importance of remaining mindful of potential antitrust issues in both commercial and ESG activities, including the following takeaways:

• The goal of antitrust law is to ensure that companies compete vigorously and fairly in the marketplace. Companies can compete not only on price, but also on product features (including “green” or “sustainable” product aspects) and supply chain management. And, companies that do not offer the same service or product might still compete in other ways (for example, to hire and retain talented employees).
• Antitrust enforcement occurs not only at the federal level (DOJ and FTC), but also at the state level. Even if the federal authorities do not challenge or object to a particular business practice, state AGs can and do bring independent antitrust claims. In addition, business activities might also be subject to challenge by private plaintiffs.
• Particularly on the issue of ESG activities, state AG scrutiny of potential antitrust violations may be on the rise. For example, just a few months ago the Arizona Attorney General wrote an op-ed raising the question of whether certain ESG initiatives might constitute antitrust violations. And as both of these recent letters indicate, investment companies may receive heightened attention due to their management of public funds.
• Finally, companies should be sure that they have an effective and comprehensive antitrust compliance program that includes policies, procedures, and training to help employees navigate the potential antitrust risks associated with ESG business initiatives and know when to seek antitrust guidance.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.