You're in a meeting when someone asks, "Didn't we get DOJ approval for this back in the '90s?" It's a fair question. Your organization received a Business Review Letter decades ago, your business model has evolved, and now you're wondering if that old assurance still holds.
The Justice Department's recent withdrawal of a 1987 Business Review Letter issued to Institutional Shareholder Services (ISS) offers a clear answer: probably not. This move highlights a reality that compliance teams often overlook, regulatory clearances aren't lifetime guarantees, especially when your business changes.
What Happened with ISS?
In 1987, the Antitrust Division issued ISS a Business Review Letter based on the understanding that ISS would "offer advice only on matters relating to the exercise of voting rights on issues of corporate governance" and would not "provide advice or engage in discussions with respect to the corporate operations or business activities." That was the deal.
ISS's business evolved. The company now offers corporate consulting services alongside proxy voting advice, services that weren't part of the original 1987 business model. The Antitrust Division withdrew the letter because ISS's current practices don't match what the Division reviewed 38 years ago.
The withdrawal doesn't accuse ISS of wrongdoing. It simply states that the 1987 letter "does not reflect ISS's current business practices or the Antitrust Division's view of those practices." The Division also noted that ISS and Glass Lewis control more than 90 percent of the proxy advisory market, raising "significant competition concerns."
Should You Be Concerned About Old Clearances?
Not necessarily concerned, but you should review them. Every Business Review Letter includes language stating it "remains completely free to bring whatever action or proceeding it subsequently comes to believe is required by the public interest." That's not fine print, it's the central limitation.
Ask yourself three questions:
- Has your business model changed since you received the clearance?
- Has the regulatory environment or enforcement priority shifted?
- Does the clearance address practices you're actually engaged in today?
If you answered yes to any of these, schedule a review with legal counsel. The ISS situation shows that even if you're not doing anything wrong, operating under an outdated clearance creates unnecessary risk.
Approval vs. Compliance: What's the Difference?
Approval is a snapshot. Compliance is ongoing.
A Business Review Letter tells you the DOJ's enforcement intention at a specific moment, based on specific facts you presented. It doesn't analyze facts you didn't disclose, business lines you hadn't launched, or enforcement theories that didn't exist yet.
Compliance requires you to assess your conduct against current law and current enforcement priorities, regardless of what someone said 20 or 30 years ago. If your industry has consolidated, if your market share has grown, or if your services now touch areas the original clearance explicitly excluded, you're operating in uncharted territory.
When to Reassess Old Regulatory Positions
There's no universal schedule, but trigger events should prompt immediate review:
- Material changes to your business model or service offerings
- Significant market share growth or industry consolidation
- New enforcement guidance or policy statements from regulators
- High-profile enforcement actions in your industry
- Changes in who your competitors are or what they're doing
At minimum, include regulatory clearances in your annual compliance risk assessment. Treat them like vendor contracts, review them periodically to confirm they still reflect reality.
For industries with high regulatory scrutiny, consider annual reviews with outside counsel who specialize in that enforcement area.
What to Do If Your Business Has Outgrown an Old Clearance
First, don't panic. The fact that a clearance no longer covers your current activities doesn't mean those activities are illegal. It means you need to assess them on their own merits.
Work with antitrust or regulatory counsel to:
- Document how your business model has changed since the clearance
- Identify which current activities fall outside the scope of the original clearance
- Assess whether those activities raise competitive concerns under current law
- Determine whether you need to seek updated guidance or simply ensure you're compliant
In some cases, you might decide to request a new Business Review Letter. In others, you might adjust your practices or simply document your compliance analysis. The ISS withdrawal doesn't tell us what ISS will do next, but it clarifies that operating under an outdated clearance isn't a defense.
Market Concentration: Lessons for Other Industries
The Antitrust Division specifically noted that ISS and Glass Lewis "control more than 90 percent of the proxy advisory market" and that "concentration of market power in the proxy advisory market raises significant competition concerns." This isn't unique to proxy advisors.
If your industry has consolidated significantly since you received regulatory clearance, that consolidation itself may trigger renewed scrutiny. Market concentration has become a priority enforcement theme across multiple agencies, not just the Antitrust Division.
Consider whether your market looks fundamentally different than it did when you last engaged with regulators. If three competitors have become one, if your market share has doubled, or if your services now influence competitor behavior in ways they didn't before, it's time for a fresh analysis.
The Bigger Lesson: Compliance Is Ongoing
The ISS withdrawal reminds us that compliance isn't about collecting approvals and filing them away. It's about continuously assessing whether your practices align with current legal standards and enforcement priorities.
Business Review Letters, advisory opinions, and similar regulatory clearances are valuable, they show regulators took your concerns seriously and provided guidance at a specific moment. But they're not insurance policies. They don't protect you from future enforcement if your facts change or enforcement priorities shift.
Build a practice of reviewing old clearances whenever your business evolves. Document the assumptions underlying any regulatory guidance you've received. And when those assumptions no longer hold, don't assume the guidance still protects you.
Next Steps
If you're operating under an old Business Review Letter or similar clearance, start by pulling the original submission and the agency's response. Compare what you told them then to what you're doing now. If there's daylight between the two, talk to antitrust counsel.
The Antitrust Division's 2020 comments on proxy voting advice provide additional context on its current thinking about the proxy advisory market. For businesses in other sectors, review recent enforcement actions and policy statements in your industry to gauge whether priorities have shifted since you last engaged with regulators.
And remember: the goal isn't to avoid regulator contact. It's to ensure that when you do engage, you're presenting current facts and getting guidance that actually applies to your business today.
