U.S. Steel and Nippon Steel have filed a lawsuit against the Biden administration alleging that President Joe Biden unlawfully blocked their $14.9bn (Y2.35trn) merger through a biased national security review.
The companies are seeking to have a federal appeals court overturn Biden’s decision, allowing them to pursue a fresh review free from political influence.
The lawsuit claims that Biden prejudiced the decision of the CFIUS, which is responsible for scrutinising foreign investments for national security risks.
The companies argue that this action violated their right to a fair review process.
The merger has been highly politicised in the lead-up to the November US presidential election, with both Biden and Republican President-elect Donald Trump pledging to oppose it to appeal to voters in Pennsylvania, where U.S. Steel is headquartered.
United Steelworkers (USW) union president David McCall also opposed the merger.
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By GlobalDataBoth Biden and Trump asserted that U.S. Steel should remain US-owned, despite Nippon Steel’s offer to relocate its US headquarters to Pittsburgh and honour all agreements with the USW.
The companies allege that Biden’s actions were intended to “curry favour with the USW leadership in Pennsylvania in his bid for re-election”.
In a statement, the companies said: “As a result of President Biden’s undue influence to advance his political agenda, the Committee on Foreign Investment in the United States failed to conduct a good faith, national security-focused regulatory review process.”
A White House spokesperson defended the review, stating: “President Biden will never hesitate to protect the security of this nation, its infrastructure and the resilience of its supply chains.”
The lawsuit echoes claims made by the companies in a letter to the CFIUS on 17 December 2023, indicating that they are following through on their threats of litigation.
Nippon Steel vice-chair Takahiro Mori noted that the CFIUS review lacked integrity, as the Japanese company received no written feedback regarding the proposed national security agreement.
The outcome of the lawsuit, which also names US Attorney General Merrick Garland and Treasury Secretary Janet Yellen, remains uncertain, as courts typically defer to the CFIUS on national security matters.
Nippon Steel CEO Eiji Hashimoto said: “If we win the case and CFIUS reopens the review… we will explain once again that this acquisition is beneficial to the United States.”
Additionally, the companies have filed a second lawsuit against rival bidder Cleveland-Cliffs, its CEO Lourenco Goncalves and McCall for their alleged coordinated actions to obstruct the merger.
They argue that Cliffs, Goncalves and McCall colluded to monopolise the domestic steel markets by hindering other attempts to acquire U.S. Steel.
