Open the White House Watch newsletter for free
Your guide to what the 2024 US elections mean for Washington and the world
Nippon Steel and US Steel have filed lawsuits in the US alleging “unlawful interference” after a proposed $15 billion merger between the two steelmakers was blocked by President Joe Biden just days ago.
The companies said in a statement on Monday that they had requested the first lawsuit BidenThe decision to cancel it was due to “unlawful political interference” in the process.
The second suit was filed against rival steel producer Cleveland-Cliffs Corp., its CEO Lourenco Goncalves, and United Steelworkers Chairman David McCall, alleging “unlawful and coordinated actions intended to block the deal.”
“Today’s legal actions demonstrate Nippon Steel and US Steel’s continued commitment to completing the transaction,” the companies said in the statement.
These legal claims represent the latest development in the takeover saga that has put relations between the United States and Japan under great pressure, heralded the emergence of new hostility in the investment climate in the United States, and cast doubt on the independence of the American national security investment screening mechanism.
In order Released on Friday In blocking the deal, Biden said there was “credible evidence” that Nippon, through the takeover, might take steps that would harm US security.
Through lawsuits Nippon US Steel aims to prove that Biden “ignored the rule of law” to curry favor with unions and support his political agenda, and that the Committee on Foreign Investment in the United States (CFIUS), which monitors offshore buyers for US companies, failed to conduct a good faith review.
The companies added that Operation Cfius was intended to reach a “predetermined outcome” after Biden made clear his opposition to the deal in March, before any security review was conducted.
It also aims to show that US rival Cleveland-Cliffs is seeking to prevent any other buyer from acquiring US Steel “as part of a broader illegal campaign to monopolize domestic steel markets.”
It was manufactured by the Cleveland-Cliffs Company, an American steel manufacturer competitor Unsolicited offer To buy US Steel in July 2023, after which a wider auction was held, with Nippon Corporation at the head.
“By blocking Nippon Steel's attempt to take over US Steel, the Biden administration protected vital American interests, preserved our national security and helped sustain the domestic steel industry that supports our country's critical supply chains,” USW's McCaul said Monday. He added that the union is “reviewing the complaint and will vigorously defend against these baseless allegations.”
The Cleveland Cliffs did not immediately respond to a request for comment.
The legal action came after Biden vetoed the deal in light of the failure of the Committee on Foreign Investment to reach a consensus on whether the deal poses a threat to national security.
Nippon has made extensive efforts to address these concerns by promising to invest $2.7 billion to modernize facilities and ensuring that production capacity at most sites will not be reduced for 10 years without US government approval.
Biden's decision to cancel Nippon's acquisition of the famous American competitor threatens to cause turmoil in the alliance and trade relations with the United States' most important partner in East Asia and the largest investor at home.
Japanese Prime Minister Shigeru Ishiba warned at a news conference on Monday that the United States needed to explain more clearly why security concerns existed, and said blocking the matter sent a scary message to potential Japanese investors in the United States.
“It is unfortunate that concerned voices are rising within the Japanese industrial sector regarding future investment in the United States,” he said. “We can only take these concerns seriously and strongly urge the US government to allay these concerns.”
US presidents have vetoed eight other takeovers following reviews conducted by Cfius since 1990, according to the Congressional Research Service, but none had been carried out by a Japanese company until last week.
There is precedent for the US government to get involved in a legal battle after the president blocked a takeover deal.
In 2015, Chinese-owned Ralls won a settlement after claiming the U.S. government violated due process when it ordered the divestment of four wind farms near a military base in Oregon after a CFIUS review.
