*

Texas, other states accuse asset managers of discouraging

coal

output

*

Blackrock ( BLK ), State Street and Vanguard have sought to have

the

case dismissed

*

DOJ and FTC urge judge to reject several of the asset

managers'

arguments

(Updates to remove previous sourcing in first paragraph)

By Jody Godoy and Ross Kerber

May 22 (Reuters) - U.S. federal antitrust enforcers

expressed support on Thursday for arguments wielded by

Republican states that accuse asset managers BlackRock ( BLK ),

Vanguard and State Street of conspiring through climate

activism to decrease coal output.

The U.S. Department of Justice and Federal Trade Commission

filed a statement of interest in the case where Texas and 12

other states claim the companies used their substantial holdings

in U.S. coal companies to discourage competition.

The agencies urged the judge overseeing the case in Tyler,

Texas, to reject several of the arguments the asset managers

made in their bid to dismiss the case, including that the

alleged conduct falls under an exemption for passive investors.

"This case is about precisely the sort of conduct, including

concerted efforts to reduce output, which have long been

condemned under the antitrust laws," the agencies said in their

court brief.

BlackRock ( BLK ) said that forcing asset managers to divest

from coal companies would harm the companies' access to capital

and likely raise energy prices.

State Street said it acts in the long-term interests of

investors and that the lawsuit is baseless.

Vanguard reiterated its prior comment that it would

defend its history of safeguarding returns for investors.

Reuters first reported earlier on Thursday that the

agencies were expected to support the states' arguments.

The development marks a political setback for the top asset

managers. With some $27 trillion among them, BlackRock ( BLK ), Vanguard

and State Street have come under fire from conservative

Republicans, many from energy-producing states, who say the

firms wrongly put environmental and social concerns above

maximizing returns for their customers.

BlackRock ( BLK ), for instance, faces restrictions and outright

bans on managing public assets in states including Texas and

Indiana over its ESG policies. There were signs of thawing

relations in February when the company led a consortium to buy

ports near the strategic Panama Canal, a deal hailed by U.S.

President Donald Trump.

The asset managers have called the case "half-baked" and say

there is no evidence they pressed for reduced output. U.S.

District Judge Jeremy Kernodle is scheduled to hear arguments on

the asset managers' bid to dismiss the case in June.