U.S. Steel and Japan-based Nippon Steel sued the Biden administration on Monday over a decision made last week to block a merger between the two companies.
A proposed $14 billion acquisition of the second-largest domestic steel producer by Nippon would threaten U.S. national security, the Biden administration said.
The two companies allege in their lawsuit that election-season political considerations undermined formal government review of the merger.
The lawsuit alleges that the Biden administration used the government review process as a pretext to reject the merger as a favor to the United Steelworkers (USW) labor union.
“President Biden’s Order is the culmination of a months-long campaign to subvert and exploit the United States’ national security apparatus for the purpose of keeping a promise made by the President and his advisors to the USW leadership,” Nippon Steel and U.S. Steel said Monday in a statement outlining their lawsuit.
The decision to block the merger came weeks after a federal committee declined to issue a recommendation on the U.S. Steel-Nippon Steel deal, leaving Biden an opportunity to block the agreement.
The Committee on Foreign Investment in the United States (CFIUS), which is tasked with a review of the potential acquisition, shared concerns about the national security risks posed by the loss of a key domestic steel producer.
Biden echoed those national security fears in a statement upon blocking the deal on Friday.
“Without domestic steel production and domestic steel workers, our nation is less strong and less secure,” Biden said.
According to U.S. Steel and Nippon Steel, Biden first announced plans to block the merger in March 2024, before CFIUS began its review of the national security implications of the deal.
USW holds a large concentration of workers in the influential swing state of Pennsylvania, U.S. Steel and Nippon Steel said in Monday’s statement.
The union currently has 1.2 million members, according to USW.
“CFIUS engaged in a process that was designed to reach a predetermined result: supporting President Biden’s political decision,” U.S. Steel and Nippon Steel further said in their joint statement Monday.
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