House Committee Probes Proxy Advisory Giants Over Antitrust Concerns

The House Judiciary Committee has launched an investigation into Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co., two dominant players in the proxy advisory industry, citing concerns over their market power and potential antitrust violations.

According to Bloomberg Law, the Republican-led committee sent letters to both firms on Monday, demanding records dating back to 2021. The panel is seeking documents related to proxy votes, shareholder proposals, and proxy voting guidelines as part of its efforts to assess whether current U.S. antitrust laws sufficiently address competition concerns in the industry.

The investigation stems from concerns that ISS and Glass Lewis, which together control an estimated 90% of the U.S. proxy advisory market, may be using their influence to pressure corporations into purchasing consulting services while also limiting competition from smaller advisory firms. Per Bloomberg Law, the committee is specifically examining whether the firms’ market dominance enables them to manipulate corporate governance decisions and impose ideological agendas on U.S. businesses.

Related: House Committee Probes Proxy Advisory Giants Over Antitrust Concerns

Under U.S. antitrust law, companies are prohibited from engaging in collusion that restricts market competition. Section 1 of the Sherman Act forbids agreements that reduce output and drive up costs, while Section 2 prohibits entities from leveraging monopoly power to stifle competitors. The committee’s letters suggest that ISS and Glass Lewis may be operating in ways that violate these provisions, effectively acting as “de facto corporate governance regulators” whose recommendations influence up to 30% of shareholder votes at U.S. companies.

Bloomberg Law reports that the panel is also scrutinizing the firms’ alleged alignment on environmental, social, and governance (ESG) issues, as well as Diversity, Equity, and Inclusion (DEI) initiatives. The committee has raised concerns that ISS and Glass Lewis provide nearly identical recommendations on such matters, which it argues could indicate collusive behavior. A review cited by the committee found that the two firms voted the same way on executive compensation proposals in 87% of cases.