In a bold legal move, U.S. Steel and Nippon Steel have filed a lawsuit accusing the Biden administration of unlawfully blocking their $14.9 billion merger proposal. The companies claim that the decision, made under the guise of national security concerns, was politically motivated and aimed at influencing the 2024 election.
The lawsuit, filed on January 6, asserts that President Biden improperly influenced the review by the Committee on Foreign Investment in the United States (CFIUS), skewing the process to align with his political agenda. The companies are now pushing for the case to be reconsidered by a federal appeals court, seeking a fresh review that is free from political interference.
The merger proposal, which had already faced intense political scrutiny, became a key talking point in Pennsylvania, home to U.S. Steel’s headquarters. Both Biden and his political rival, former President Trump, expressed opposition to the deal, positioning themselves as defenders of American manufacturing jobs in the battleground state. Furthermore, the United Steelworkers union, led by President David McCall, voiced strong opposition to the merger, adding further fuel to the political firestorm.
Biden’s administration, according to the plaintiffs, sought to derail the merger to secure the support of the powerful union as part of his reelection strategy. In their filing, U.S. Steel and Nippon Steel argue that the CFIUS review was undermined by external pressures, preventing a fair and impartial evaluation of the national security risks.
A White House spokesperson defended the review, insisting that the president would always act to protect U.S. security and supply chain resilience. Meanwhile, Nippon Steel’s leadership has expressed dissatisfaction with the review process, noting that they never received written feedback on their security mitigation proposals.
The lawsuit also targets rival Cleveland-Cliffs and its CEO Lourenco Goncalves, as well as the United Steelworkers’ McCall, accusing them of orchestrating a campaign to prevent the merger and monopolize the domestic steel market. Cleveland-Cliffs has denied these allegations, dismissing them as baseless attempts to distract from the companies’ failed merger plans.
The outcome of the lawsuit remains uncertain, especially as courts tend to defer to the judgment of CFIUS on matters of national security. However, Nippon Steel remains hopeful that if the case is reopened, they can demonstrate that the merger would benefit the U.S. economy.
U.S. Steel, a company with a storied history, has faced financial challenges in recent years, making it a prime target for acquisition. Despite this setback, its stock saw a rise of approximately 8% following the news of the legal action, reflecting investor confidence that the deal might eventually go through.