It’s no secret that tech billionaire Elon Musk is no fan of ESG, famously decrying ESG as “the devil” last year. So we shouldn’t be surprised to see Elon’s social media company “X” (formerly Twitter) pull from the Anti-ESG playbook in a recent lawsuit. For those unfamiliar, X is suing advertising industry group Global Alliance for Responsible Media, alleging that the group engaged in anti-competitive practices when it advised its members to pull advertising from X. The New York Times describes the case stating:
“The suit, filed in federal court in Texas, claims that the coalition known as GARM, ‘conspired’ with leading brands, including CVS, Unilever, Mars and the Danish energy company Orsted to ‘collectively withhold billions of dollars in advertising revenue’ that were owed to X, then known as Twitter, in the wake of Elon Musk’s takeover of the social media company in 2022.”
For those following anti-ESG litigation, you’ll recognize this exact legal theory as the one pushed by many red state attorneys general against groups like ClimateAction 100+, which they allege violate antitrust law by “conspiring” to illegally boycott oil companies. What makes the X case noteworthy is that this is the first time someone has brought the theory into a courtroom. So far, the anti-ESG AGs have threatened legal action on these grounds and even begun conducting investigations, but have stopped short of bringing actual litigation. Many theorize that this is because the competition law theory is lacking and not viable in a court of law. However, thanks to the X case, we’ll get a first-hand look at how the theory plays out and whether or not courts are receptive to holding industry associations in violation of antitrust law. This means that the X case will have implications for ESG and how anti-ESG might choose to bring legal challenges going forward. Right now, many are intimidated by the possibility of antitrust litigation because the outcome is unknown, but if the case falls flat and X loses in Texas, it could take the wind out of the anti-ESG’s argument. Alternatively, a victory could embolden anti-ESG and see a floodgate of litigation open.
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