Amidst growing federal and state scrutiny of proxy advisory firms, the U.S. Department of Justice’s Antitrust Division (the “Division”) recently entered the fray. On August 5, 2026, the Division withdrew its 1987 business review letter (the “Letter”) to proxy advisory firm Institutional Shareholder Services Inc. (ISS), stating that the Letter no longer reflects ISS’s current business practices and citing concerns about concentration among proxy advisors.
The Division’s decision to withdraw the Letter is not an enforcement action or a finding that ISS violated the antitrust laws. In fact, the Division emphasized that proxy advising is not inherently problematic and that voting based on a proxy advisor’s recommendation does not by itself raise competition concerns. However, the Division’s decision signals that proxy advisors like ISS, and perhaps the broader asset management industry, may face increased scrutiny, especially during next year’s proxy season.
Under the Division’s business review letter program, companies may request guidance on whether proposed conduct is likely to draw an antitrust challenge. After the program was inactive throughout the Biden administration, the Division announced its revival in July 2026. Under 28 C.F.R. § 50.6, a business review letter is fact-specific, applies only to the requesting parties and conduct described in the request, and states only the Division’s enforcement intentions as of the letter’s date. The Division remains free to take later action if it concludes that the public interest requires it.
In 1987, the Division issued a business review letter stating that it had “no current intention” to challenge ISS’s establishment and operation, based on its understanding that ISS would advise only on voting rights and corporate governance and would not advise or engage in discussions concerning “corporate operations or business activities.” However, when withdrawing the Letter nearly four decades later, the Division observed that ISS now offers corporate consulting services that contradict the factual premise of the Letter.
The Division also referenced the concentration among proxy advisors as part of its reasoning for withdrawing the Letter. The Division noted that ISS and Glass, Lewis & Co. LLC (“Glass Lewis”) together “control more than 90% of the proxy advisory industry,” which raises “significant competition concerns” because of their alleged influence over corporate governance matters for America’s largest companies.
Although it did not identify an antitrust violation or announce an investigation, the Division’s decision to withdraw the Letter comes amid a flurry of antitrust inquiries by myriad enforcers targeting proxy advisors’ market position, potential conflicts, disclosures, methodologies, and sustainability-related voting policies.
Apart from these antitrust-focused investigations, several states have pursued broader legislative and enforcement initiatives against proxy advisory firms in recent years. Several state legislatures have introduced or passed legislation requiring proxy advisors to provide explicit financial justifications and public disclosures whenever their voting recommendations involve sustainability factors, resulting in some cases in federal courts enjoining enforcement of these laws against ISS and Glass Lewis.
Other than the statement of interest mentioned above, the Division has been largely silent on proxy-advisory services until now. Although it does not mean that the Division is investigating the firm or the industry, the Division’s decision to withdraw the Letter to ISS clears the path for such an action. The Division also would not be starting from scratch. The antitrust inquiries by other enforcers in recent years have led to the disclosure of a significant amount of information about the proxy advisors and the U.S. companies they advise. This information may be more than sufficient for the Division to open an investigation, which means that proxy advisors—and the companies and investors that rely upon them—should tread carefully.