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(CN) — Nippon Steel and U.S. Steel sued President Joe Biden and steelmaking competitors on Monday over Biden’s decision to block a proposed $14.9 billion merger between the two companies.
The companies claim that illegal political and corporate corruption caused the deal’s demise, filing suit in the District of Columbia Circuit against Biden, Treasury Secretary Janet Yellen, U.S. Attorney General Merrick Garland and the Committee on Foreign Investment in the United States.
Biden’s Friday executive order blocking the merger, the companies argue, was surreptitiously made for personal political gains rather than U.S. interests.
“The president and CFIUS corrupted and compromised a critical mechanism for the protection of America’s national security in order to serve the president’s personal political agenda,” the companies wrote in federal appeals court filings.
Biden’s executive order relied on the Defense Production Act, which allows the president to suspend or prohibit transactions with foreign companies that could impair national security.
However, the companies noted, Biden began publicly expressing his decision to block the merger as early as February 2024 — before federal reviews of the proposed acquisition had begun.
“The president’s decision had nothing to do with national security,” the companies wrote in the suit. “How could it when the national security evaluation had not even started?”
Instead, the companies claim, Biden publicly opposed the deal to bolster his then-active reelection campaign — specifically, to obtain the support of United Steelworkers union leaders in the swing state of Pennsylvania.
“The public record makes clear that the president’s decision was based on illegitimate and self-serving political considerations — a clear violation of the entire CFIUS process, which was created as an apolitical safeguard to protect national security,” the companies added.
Describing the federal review as a “sham,” the companies asserted violations of their due process rights, the Defense Production Act and the Administrative Procedure Act, as well as an overreach of presidential powers.
The companies seek to have Biden’s executive order vacated and the Committee on Foreign Investment to reconduct its review of the proposed acquisition. In a joint press release, they said Monday’s lawsuit demonstrates a “continued commitment to completing the transaction.”
“We remain confident that the transaction is the best path forward to secure the future of U.S. Steel — and we will vigorously defend our rights to achieve this objective,” the companies wrote.
Steel-stealing deals
Taking action against the federal government isn’t the only legal avenue U.S. Steel and Nippon Steel are pursuing to revive their merger.
In a separate lawsuit filed Monday in the U.S. District Court for the Western District of Pennsylvania, the pair of steel companies claim that rival steel manufacturer Cleveland-Cliffs and its chief executive Lournco Goncalves conspired with United Steelworkers president David McCall to influence and ultimately terminate the proposed merger in an anticompetitive conspiracy.
Describing Cleveland-Cliffs’ relationship with United Steelworkers as a “steelmaking cartel,” U.S. Steel and Nippon Steel asserted that the duo subverted federal review of the transaction, treating Biden administration officials as “marionettes” to block the merger and force U.S. Steel into a takeover by Cleveland-Cliffs.
“According to Goncalves, members of CFIUS were and are just pawns in defendants’ broader scheme to kill U.S. Steel’s deal with [Nippon Steel] and pursue Cliffs’ goal of monopolizing critical steel markets — a position that is in direct conflict with CFIUS’s mandate to safeguard national security and the Biden administration’s purported commitment to enforcing the antitrust laws and protecting the domestic steel industry,” U.S. Steel and Nippon Steel wrote in the suit.
“Enough is enough,” they added.
Arguing that Cleveland-Cliffs, Goncalves and McCall’s actions violate both the Sherman Antitrust Act and the Racketeer Influenced and Corrupt Organizations Act, U.S. Steel and Nippon Steel seek enjoinment of their purported interference, as well as monetary damages to be determined at trial.
Representatives for Nippon Steel, U.S. Steel, the White House, Cleveland-Cliffs and United Steelworkers could not be immediately reached for comment.
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