Nippon and US Steel sue Biden for ‘sham’ review blocking $15 billion deal

Simone Del Rosario: U.S. Steel and Nippon Steel sued the Biden administration over blocking the $15 billion merger on the grounds of national security, calling the review process a “sham.” It is the star-crossed steel companies’ last-ditch attempt to revive the deal President Joe Biden squashed last week.

In a separate lawsuit, the companies accuse rival bidder Cleveland-Cliffs of “illegal and coordinated actions” aimed at preventing the merger between Japan’s Nippon and U.S. Steel. U.S. Steel previously rejected the Ohio-based steel producer’s bid to acquire it in favor of Nippon’s offer, which was worth about twice as much. 

In its petition against the government, the companies accuse Biden of ignoring the rule of law to win favor with the United Steelworkers union. The lawsuit alleges Biden and the panel in charge of reviewing the merger “corrupted and compromised” the process to serve Biden’s personal political agenda. 

Biden’s move to block the merger on the grounds of national security is unprecedented action against a close U.S. ally. Previous foreign mergers blocked through this review process involve adversaries like China. 

In a statement announcing his decision to block the merger, Biden said, “We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests. As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”

The panel Biden mentioned is the Committee on Foreign Investment in the United States (CFIUS). CFIUS failed to agree on whether to recommend the president approve or reject the deal, punting the decision to Biden. The companies are asking CFIUS to start a new review of the deal, calling the previous review process a sham. 

Biden first announced his opposition to the merger in March 2024, well before the panel reviewed the deal for national security risks. 

He wrote back then, “I told our steel workers I have their backs, and I meant it. U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”

The companies at the center of the merger said Biden’s statements flipped the process on its head. They claim his opposition has nothing to do with national security. The United Steelworkers union, which represents 850,000 workers, has long opposed the merger between Nippon Steel and U.S. Steel. 

The union praised Biden’s decision to block the deal in a statement last week, saying their first and only concern has been the long-term viability of U.S. facilities. 

The union said, “Nippon has proven itself to be a serial trade cheater that for decades worked to undermine our domestic industry by dumping its products into our market. Allowing it to purchase U.S. Steel would have offered it the opportunity to further destabilize our trade system from within.”

The union publicly preferred a deal with U.S.-based Cleveland-Cliffs, which is also wrapped up in litigation with Nippon Steel and U.S. Steel’s latest legal action. 

The companies accuse Cleveland-Cliffs, its CEO Lourenco Goncalves, and United Steelworkers President David McCall of “engaging in a coordinated series of anticompetitive and racketeering activities illegally designed to prevent any party other than Cliffs from acquiring U. S. Steel as part of an illegal campaign to monopolize critical domestic steel markets.”

The lawsuit accuses the parties of launching a public smear campaign against U.S. Steel and claiming responsibility for Biden’s opposition, calling the CFIUS review a “cover.”

Last week, U.S. Steel CEO David Burritt blasted Biden’s block as “shameful and corrupt.”

He said, “He gave a political payback to a union boss out of touch with his members while harming our company’s future, our workers, and our national security.” 

“And Biden did it all while refusing to even meet with us to learn the facts.”

SAN reached out to the U.S. government and Cleveland-Cliffs for comment on the allegations levied in these lawsuits and have yet to hear back. The text of this article will be updated if we get a response. Be sure to download the Straight Arrow News app and enable notifications so you don’t miss a thing.