On August 5, 2026, the Antitrust Division of the Department of Justice (“Antitrust Division”) withdrew its 1987 Business Review Letter (“BRL”) issued to Institutional Shareholder Services, Inc. (“ISS”) that provided comfort that certain of its proxy advisory activities would not be subject to Antitrust Division enforcement. The withdrawal follows an Executive Order from last December that ordered the antitrust agencies to investigate proxy advisors for unfair methods of competition. The withdrawal removes any comfort that ISS had from the 1987 BRL and may signal broader implications for proxy advisory firms that issue uniform voting recommendations.
December 2025 Executive Order on Proxy Advisors
On December 11, 2025, the Trump administration issued an Executive Order curtailing the influence of ISS and Glass, Lewis & Co. LLC (“Glass Lewis”). The Executive Order sought to rein in the proxy advisors’ support for diversity, equity and inclusion (“DEI”) and environmental, social and governance (“ESG”) initiatives. The Executive Order included an instruction to the Attorney General and Federal Trade Commission to investigate the proxy advisors’ activities for “engag[ing] in unfair methods of competition or unfair or deceptive acts” that harm consumers. (Our client alert on the Executive Order is here.)
The 1987 Business Review Letter
ISS (and Glass Lewis) is a proxy advisory firm that provides institutional investors—including pension funds, mutual funds and asset managers—that own stocks across multiple corporations with voting recommendations on a litany of corporate governance matters, such as director elections, executive compensation and new stock issuance. ISS’s founder identified a structural gap in the institutional investment community: fiduciaries responsible for managing vast pools of capital lacked information or special competence to exercise their voting rights. Its proposed solution was a services company that: (1) advised plan managers and trustees on how to vote on corporate governance matters; (2) created a forum for discussion about voting rights issues among fiduciaries; and (3) facilitated the development of standards for the exercise of voting rights.
A potential issue, however, was that ISS’s activities—voting recommendations to institutional investors holding minority positions in multiple corporations—could run afoul of antitrust laws if they were viewed as a hub-and-spoke conspiracy. The hub—ISS—could coordinate the future actions of multiple corporations via the spokes—institutional investors simultaneously owning voting-class stock across multiple corporations—through uniform voting recommendations.
Thus, ISS requested a BRL to advise the company of its then-antitrust enforcement intentions with respect to ISS’s proposed activities. A BRL is an enforcement and prosecutorial discretionary tool that states the Antitrust Division’s current enforcement intentions with respect to proposed conduct. The Antitrust Division issued the BRL to ISS on two bases:
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Limited Scope: ISS would advise institutional investors solely on corporate governance matters, but would not advise on corporate operations or business activities, such as purchases, production or sale of goods or services—areas that otherwise implicate competition, and therefore, run afoul of § 1 of the Sherman Act for unlawful coordination on price, output, supply, etc.
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Fiduciary Purpose: The Antitrust Division recognized that institutional investor fiduciaries managing ERISA plans have legal obligations to plan beneficiaries, and the purpose of ISS was to help these fiduciaries discharge their duties competently. Thus, the fiduciary purpose provided a pro-competitive rationale for the information sharing and forum activities that ISS had proposed.
Consistent with BRL practice, the Antitrust Division reserved the right to bring an enforcement action if the actual operations of ISS proved to be anticompetitive in purpose or effect.
The Antitrust Division’s 2026 Withdrawal
Following the Executive Order’s directive, the Antitrust Division withdrew the 1987 BRL and explained that its actions were taken for two reasons:
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Current Market Conditions: Market conditions in the proxy advisory services market have dramatically changed since 1987 such that the original conditions under which the BRL was issued no longer apply. According to the Antitrust Division, ISS and Glass Lewis together control more than 90% of the proxy advisory services market and their institutional investor clients’ holdings represent a significant ownership stake in the largest publicly traded companies in the United States. This concentration of market power gives ISS (and Glass Lewis) outsized influence on corporate governance matters, and because of their market dominance, they can shape policies and practices (g., DEI and ESG initiatives) at the largest corporations, which are not aligned with the priorities of their institutional investor clients.
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Scope of ISS’s Current Business Operations: ISS’s business operations have expanded into more than just corporate governance advisory services—the limited scope the BRL was premised on—such that the BRL is no longer applicable to its current operations. The Antitrust Division no longer believes the 1987 BRL applies to ISS’s current business model because ISS has expanded its operations beyond the original limited scope of their proxy advisory activities. Today, ISS offers a corporate consulting service, in addition to its proxy voting advisory services, that consults on a host of sociocultural and political matters beyond the original scope of corporate governance matters, and upon which the electorate is divided, such as climate initiatives and zero emissions targeting, human rights and supply chain due diligence, workforce and pay-gap reporting, and racial, gender and sexual orientation equity. Incorporating a common set of advisory services on business activities / corporate consulting could be viewed as a hub-and-spoke conspiracy orchestrated by ISS to influence corporate policy on these issues.
An ISS spokesperson said in a statement that it maintains a firewall between its proxy advisory services business and ISS-Corporate—the business that offers corporate consulting services.[1]
The Withdrawal’s Impact and Practical Takeaways
While a BRL states only the Antitrust Division’s enforcement intentions as of the date of the letter, and therefore a nearly 40-year-old BRL may have provided only minimal comfort to ISS, the Antitrust Division’s withdrawal clearly signals that the DOJ now believes that circumstances have changed. The withdrawal may have reverberations for proxy advisory services firms in general that provide uniform voting recommendations on corporate operations to institutional advisors as well as institutional investors that vote based on those recommendations. Importantly though, the Antitrust Division makes clear that proxy advising itself is not inherently problematic and lawful exercise of voting rights based on proxy advisor recommendations does not raise competition concerns.
The withdrawal of the letter is also a signal to minority passive investors that just because they are minority shareholders, it does not necessarily mean that they are passive: antitrust safe harbors for passive investments protect most beneficial corporate governance advocacy, but they do not protect the use of commonly held stock in competitors to encourage anticompetitive conduct, such as a hub-and-spoke conspiracy.
The Antitrust Division’s withdrawal is also a reminder that agreements among competitors on product quality or attributes, as well as agreements on price, may violate the antitrust laws.
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[1] https://www.law360.com/articles/2510168/doj-pulls-iss-letter-signals-possible-antitrust-enforcement
