US Steel and Nippon Steel sue Biden administration over blocked merger

Washington — US President Joe Biden violated the constitution by blocking Nippon Steel’s $14.9bn bid for US Steel through a sham national security review, the companies alleged in a lawsuit they said was filed on Monday.

The companies want the federal court to scrap Biden’s decision to scuttle the deal so they can secure another shot at approval through a fresh national security review unfettered by political influence.

The lawsuit alleges Biden prejudiced the decision of the Committee on Foreign Investment in the US which scrutinises foreign investments for national security risks, and violated the companies’ right to a fair review.

The merger had become highly politicised ahead of the November US presidential election, with both Democrat Biden and Republican president-elect Donald Trump pledging to kill it as they wooed voters in the swing state of Pennsylvania where US Steel is headquartered. United Steelworkers (USW) union President David McCall opposed the tie-up.

Trump and Biden both asserted the company should remain American-owned even after the Japanese firm offered to move its US headquarters to Pittsburgh, where the US steelmaker is based, and promised to honour all agreements in place between US Steel and the union.

Biden sought to kill the deal to “curry favour with the USW leadership in Pennsylvania in his bid for re-election”, the companies allege.

“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,” the companies said in a statement announcing the litigation.

A White House spokesperson said: “A committee of national security and trade experts determined this acquisition would create risk for American national security. President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains.”

The lawsuit, which echoes claims the companies made in a December 17 letter to foreign investment committee, shows the companies are making good on their threats of litigation and will continue to fight to get the deal approved.

“We can’t back down after being treated unreasonably. We will fight back thoroughly,” Nippon Steel vice-chair Takahiro Mori told Nikkei in an interview on Monday.

Mori said the review process lacked integrity as the Japanese company received no written feedback on the proposed national security agreement it voluntarily presented, and there were no questions or concerns expressed by the committee during multiple meetings, Nikkei said.

The prospects are unclear for the lawsuit, which also targets attorney-general Merrick Garland and treasury secretary Janet Yellen, who oversees foreign investment committee. Courts generally give great deference to it to define national security, experts say.

The justice department declined to comment and the treasury department did not respond to a request for comment.

Trump, in a post on his social media platform, said “Why would they want to sell US Steel now when Tariffs will make it a much more profitable and valuable company?”

The companies also filed a second lawsuit against rival bidder Cleveland-Cliffs, its CEO Lourenco Goncalves and McCall “for their illegal and co-ordinated actions” aimed at preventing the deal.

They argue Cliffs, Goncalves and McCall colluded in an “illegal campaign” to allow Cliffs to “monopolise the domestic steel markets” by thwarting any other attempts to buy US Steel.

Reuters