US Steel and Nippon Steel sue Biden over decision to block deal

U.S. Steel and Japan's Nippon Steel filed suit against the U.S. government on Monday in a last-ditch attempt to revive their merger plans after President Biden blocked the merger last week, saying it posed a threat to national security. .

The lawsuit, filed in federal court in Washington, alleges that Biden and other administration officials corrupted the vetting process for political gain and blocked the deal under false pretenses of national security. and accused them of harming the U.S. steel industry.

Mr. Biden moved to block the merger after a government committee charged with reviewing foreign investments failed to reach a decision on whether the merger should proceed. Biden said in a statement Friday that the United States is acting to maintain the strength of its domestically owned and operated steel industry. The president previously vowed to ensure that U.S. Steel remains American-owned.

The companies are asking the Committee on Foreign Investment in the United States to conduct a new review of the agreement.

The companies also announced that Cleveland-Cliffs, the U.S. steel company that had previously tried to buy U.S. Steel but was rebuffed, is seeking a deal with Cleveland-Cliffs CEO Lorenco Goncalves and David, the international president of the powerful union United. He filed another lawsuit with Mr. McCall. steel workers. The complaint alleges that Cleveland-Cliffs and the union president illegally conspired to undermine the proposed agreement between U.S. Steel and Nippon Steel.

The legal action represented a long-term strategy by both companies to preserve a deal embroiled in election-year politics. The president has broad powers to determine what constitutes a national security threat, and no court has ever reversed a blocked transaction based on that power.

However, given that Japan is a close ally of the United States, Mr. Biden's move to halt Nippon Steel's $14 billion bid for U.S. Steel suggests that these powers may be abused. The question arose as to whether there was one. In rare cases, transactions are blocked, but they usually involve companies that are hostile to the United States, such as China.

“Nippon Steel and U.S. Steel are disappointed to see this nation's national security apparatus being exploited so clearly and unfairly to win elections and reward political favors,” the companies said. said in a statement on Monday. “Nippon Steel and U.S. Steel are entitled to a fair process and are left with no choice but to challenge the decision and the process that led to it in court.”

U.S. Steel CEO David Britt attacked Biden on Monday, suggesting the president blocked the deal because he “owed favors to union bosses in exchange for support.”

“The government has failed us,” Britt said in an interview on Fox Business Network on Monday. “They failed because they didn't follow the process. We're going to right that mistake.”

The White House on Monday defended Biden's decision, pointing to the committee's threats to the U.S. steel industry.

“A panel of national security and trade experts determined that this acquisition poses a risk to the national security of the United States,” White House press secretary Robin Patterson said in a statement. “President Biden will never hesitate to protect the security, infrastructure, and resiliency of our nation’s supply chains.”

The lawsuit against the Biden administration was filed in the U.S. Court of Appeals for the District of Columbia Circuit. The lawsuit also names Treasury Secretary Janet L. Yellen, who chairs the Committee on Foreign Investment in the United States, and Attorney General Merrick Garland.

The companies said the national security review conducted by the commission, known as CFIUS, was tainted by politics and “driven to reach a predetermined outcome,” since Biden publicly said last March that he did not want the deal to go through. It claims to have been designed. They also argued that the commission failed to engage with companies when proposing measures to alleviate national security concerns.

After a year-long review process, the interagency committee ultimately disagreed on the risks posed by the deal and deferred to Biden, saying U.S. Steel should remain American-owned and operated.

“It is my solemn responsibility as president to ensure that America has a strong, domestically owned and operated steel industry, providing a continuous source of national strength at home and abroad, now and into the future,” Biden said. ” Biden said. Statement last Friday morning. “And preventing foreign ownership of this important American company is a fulfillment of that responsibility.”

The commission was established in the 1970s to review international mergers and acquisitions due to national security concerns. Over the years, the definition of national security has expanded, and the committee's work is often consumed by political considerations, often focused on keeping Chinese investment out of the United States. It's dark.

Eight other foreign transactions have been blocked by presidents since 1990, according to the Congressional Research Service.

The companies hope that a 2012 lawsuit involving a Chinese-backed company that tried to acquire a U.S. wind power project could prompt further scrutiny of how CFIUS handles steel transactions. are. The Obama administration blocked the deal, but after the company filed a lawsuit, an appeals court agreed that Rall's Corporation had the right to see and disprove certain evidence used to block the deal.

The Obama administration and the company ultimately settled the lawsuit.

The legal challenges by US Steel and Nippon Steel are based on a different basis than that lawsuit. If successful, the lawsuit would mark major changes to the U.S. government's ability to scrutinize foreign transactions.

The Biden administration's move drew praise from steelworkers unions but scorn from many economists and legal experts who warned the president's decision would discourage foreign investment.

“What's frustrating is that Mr. Biden has claimed to support the rule of law and international alliances,” said John Cavearo, a Washington-based lawyer who specializes in cross-border transactions. “He told voters sickeningly that Trump was xenophobic and self-sacrificing, and now he's slapping one of his most important allies in the face on the slightest pretext.”

President-elect Donald J. Trump has previously said he would block the Japanese bid, but the companies said he may reconsider that position if given the chance to help broker a satisfactory deal. I keep looking forward to it.

But on Monday, Trump made clear he still does not want to sell U.S. Steel.

“Why would you want to sell U.S. Steel now when tariffs would make it a more profitable and valuable company?” Trump wrote on social media. “Once the greatest company in the world. Isn't it wonderful that U.S. Steel is once again leading the way in striving for greatness?”