Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Justice Department withdraws 40-year-old business review letter for proxy advisory firm, (Aug 6, 2026)

By Jody Coultas, J.D.

Changes to Institutional Shareholder Services’ business model and concentration in the proxy advisory market required the withdrawal of the business review letter.

The Department of Justice Antitrust Division announced it will withdraw a Business Review Letter (BRL) issued to proxy advisory firm Institutional Shareholder Services (ISS) in 1987. In 1987, the Antitrust Division stated that it would not enjoin the operations of ISS based on the company’s representation that it would offer advice only on matters relating to the exercise of voting rights on issues of corporate governance or engage in discussions with respect to the corporate operations or business activities. However, according to the government’s announcement, the 1987 representation by ISS may run contrary to ISS’s business model today. The announcement also noted that, because of intense concentration of market power in the proxy advisory market, ISS has tremendous influence in corporate governance matters and can shape the policies of America’s largest companies.

The Antitrust Division’s business review procedure provides a way for businesses to determine how the Division may respond to proposed joint ventures or other business conduct. A business requesting a business review will receive a response from the Justice Department in a business review letter. A business review letter from the Division includes: the procedural history of the request; a description of the representations made by the business; a statement of the Division’s enforcement intentions; and a description of how the Division makes public the information in the business review file. The Antitrust Division remains free to bring whatever action or proceeding it subsequently comes to believe is required by the public interest.

In 1987, proxy advising as an industry was in its infancy. 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. 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, and 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.”

The Letter 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. 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. Therefore, according to the government, 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. The Antitrust Division suggested that ISS’s statements that it would provide or engage in discussions with respect to the corporate operations or business activities may run contrary to ISS’s business model today. The 1987 BRL expressly qualified the Antitrust Division’s enforcement position to exclude services directed at corporate operations or activities. 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.

The Antitrust Division made a point to state that 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. Moreover, the concentration of market power in the proxy advisory market raises significant competition concerns.”

Companies: Institutional Shareholder Services

News: Antitrust AntitrustDivisionNews