The U.S. Department of Justice Antitrust Division has withdrawn its 1987 Business Review Letter concerning Institutional Shareholder Services (ISS). The Division stated that the letter was based on an earlier business model limited to proxy-voting advice and does not cover ISS's present corporate-consulting activities.

In withdrawing the letter, DOJ identified two principal competition concerns:

1. Market concentration in the proxy advisory sector; and
2. Potential conflicts between proxy-voting influence and ISS's corporate-consulting activities, which may affect the independence and objectivity of proxy recommendations.

The withdrawal does not establish that proxy advice or reliance on a proxy recommendation is unlawful. It removes the historical statement of DOJ enforcement intention and signals that current conduct may be evaluated under ordinary antitrust principles. Companies and advisers that previously relied on the 1987 letter as a safe harbor should not assume that protection continues.

For proxy advisers: Firms should review their consulting relationships, information barriers between advisory and consulting divisions, and any arrangements that could influence proxy recommendations based on commercial relationships with the subject company. Policies governing conflicts of interest should be updated to reflect the withdrawal.

For institutional investors: Asset managers and institutional shareholders that rely on proxy advisory services should assess whether their reliance on ISS recommendations creates antitrust or fiduciary exposure, particularly in the context of coordinated voting on competitor-facing resolutions.

For public companies: Companies should reassess whether advisory and consulting arrangements with proxy advisers create conflicts requiring disclosure in proxy materials or contractual safeguards in engagement letters.

For governance consultants: Firms providing corporate governance consulting services should evaluate whether their relationships with proxy advisers or their clients could be characterized as competitor-facing engagements affecting market-wide commercial policies.

For antitrust counsel: The withdrawal signals that DOJ may scrutinize proxy advisory market structure and ISS's dual role under Section 1 or Section 2 of the Sherman Act. Counsel should monitor enforcement developments and advise clients on documentation and compliance practices.

This update is prepared by ULF NEW YORK for informational purposes only and does not constitute legal advice. Readers should consult qualified counsel regarding specific transactions or compliance obligations.