Today, the Justice Department’s Antitrust Division (“Antitrust Division”) is withdrawing a 1987 Business Review Letter (the “1987 BRL” or the “Letter”) issued to Institutional Shareholder Services (“ISS”). ISS is a foreign-owned proxy advisory firm that advises its clients on how to vote shares their clients hold for thousands of corporate governance questions each year. ISS and Glass, Lewis & Co.
Key details of the case
LLC (“Glass Lewis”), control more than 90 percent of the proxy advisory market and their clients’ holdings represent a significant ownership stake in the United States’ largest publicly traded companies. As a result of this concentration of market power, ISS and Glass Lewis have tremendous influence in corporate governance matters and, based on their market dominance, shape the policies of America’s largest companies. At the time that the Antitrust Division issued its 1987 BRL to ISS, proxy advising as an industry was in its infancy.
Moreover, the Letter noted that, based on the understanding that ISS “will offer advice only on matters relating to the exercise of voting rights on issues of corporate governance. That ISS will not provide advice or engage in discussions with respect to the corporate operations or business activities,” the Department of Justice “ha[d] no current intention to bring action under the antitrust laws to enjoin the establishment and operation of ISS.”[1] The 1987 BRL did not address corporate consulting services, which ISS now offers in connection with proxy voting services. ISS’s business model is now in direct conflict with the language in the Letter.
Meanwhile, iSS is, in fact, now providing advice with respect to corporate operations. In so doing, ISS wields enormous influence over corporate governance issues and policies through its proxy voting services. A Business Review Letter “states only the enforcement intention of the Antitrust Division as of the date of the letter.
Enforcement actions and official statements
In addition, the Division remains completely free to bring whatever action or proceeding it subsequently comes to believe is required by the public interest.”[2] While the 1987 BRL stated the Division’s enforcement intention at that time, the Letter is not applicable to ISS’s current business practice of corporate consulting services. These issues were not a part of ISS’s original business model and are outside the scope of the 1987 BRL. Indeed, the representation at the time that ISS would not “provide or engage in discussions with respect to the corporate operations or business activities” may run contrary to ISS’s business model today.[3] The 1987 BRL expressly qualified the Antitrust Division’s enforcement position to exclude services directed at corporate operations or activities.
As a result, the Department of Justice has since clarified that while antitrust safe harbors for passive investment protect most beneficial corporate governance advocacy, they do not protect the use of commonly held stock in competitors to encourage market-wide reductions in output or other anticompetitive conduct.[4]. To be clear, proxy advising is not inherently problematic and the lawful exercise of voting rights pursuant to a proxy advisor recommendation does not raise competition concerns. The Antitrust Division is withdrawing its 1987 BRL because the Letter does not reflect ISS’s current business practices or the Antitrust Division’s view of those practices. For complete details, refer to the official DOJ press release.
Consequently, moreover, the concentration of market power in the proxy advisory market raises significant competition concerns. The Antitrust Division has previously recognized potential competitive concerns in the proxy advisory industry. In 2020, the Division filed comments before the Securities and Exchange Commission in a rulemaking process about proxy voting advice.[5] .
The Antitrust Division is committed to protecting the rights of all Americans, including by promoting competition, reducing barriers to entry. Ensuring full compliance with the antitrust laws in the proxy advisory market. [4] DOJ 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. For related coverage, see Arizona surgical hospital to pay $5.6 million in DOJ False Claims Act settlement.
Specifically, see also Statement of Interest of the Federal Trade Commission and the United States of America, Texas v. BlackRock, No. 6:24-cv-00437-JDK (E.D. Tex.), ECF No. 99 (May 22, 2025), https://www.justice.gov/atr/media/1401251/dl?inline.
Subsequently, [5]Comments of the United States Department of Justice, In the Matter of Release No. 34-87457, File No. S7-22-19 Amendments to Exemptions from the Proxy Rules for Proxy Voting Advice, U.S. Securities & Exchange Commission (Feb. 5, 2020), https://www.justice.gov/atr/page/file/1243656/dl?inline. For related coverage, see Medicare advantage provider complete health to pay $14,100,000 to settle false claims act suit — DOJ.
