WASHINGTON (AP) — Nippon Steel and U.S. Steel filed a federal lawsuit challenging the U.S. government’s decision to block the nearly $15 billion proposal for Nippon to acquire Pittsburgh-based U.S. Steel.
PUBLICIDAD
The lawsuit, filed on Monday in the United States Court of Appeals for the District of Columbia, alleges that it was a political decision and violated the companies' due process.
PUBLICIDAD
"Since the beginning of the process, both Nippon Steel and U.S. Steel have participated in good faith with all parties to emphasize how the transaction will improve, and not threaten, the national security of the United States, including revitalizing communities that rely on American steel, strengthening the steel supply chain, and reinforcing the domestic steel industry against the threat from China," the companies said in a statement prepared on Monday. "Nippon Steel is the only partner both willing and able to make the necessary investments."
Nippon Steel had promised to invest 2.7 billion dollars in the blast furnace operations of U.S. Steel in Gary, Indiana, and in Mon Valley, Pennsylvania. It also committed to not reduce production capacity in the United States over the next decade without government approval.
President Joe Biden decided on Friday to halt the acquisition by Nippon - after federal regulators failed to reach an agreement on whether to approve it - because "a strong steel industry, domestically owned and operated, represents an essential national security priority. ... Without domestic steel production and domestic steelworkers, our nation is weaker and less secure," he said in a statement.
While administration officials have said that the decision was not related to Japan's relationship with the United States — this is the first time a U.S. president has blocked a merger between an American and Japanese firm.
Biden will leave the White House in just a few weeks.
The decision by the president to block the agreement comes after the Committee on Foreign Investment, known as CFIUS, failed to reach a consensus on the potential national security risks of the agreement last month, and sent a report on the merger to Biden. He had 15 days to make a final decision.
In a separate lawsuit filed in the Western District Court of Pennsylvania on the same day, the companies accused rival steelmaker Cleveland-Cliffs Inc. and its CEO, Lourenco Goncalves, in coordination with David McCall, the head of the United Steelworkers union, of "engaging in a coordinated series of anticompetitive and organized crime activities" to block the agreement.
In 2023, before U.S. Steel accepted Nippon's purchase offer, Cleveland-Cliffs offered to buy U.S. Steel for 7 billion dollars. U.S. Steel rejected the offer and later accepted a cash offer of nearly 15 billion dollars from Nippon Steel, which is the deal that Biden overturned on Friday.
The companies allege that Goncalves, in collusion with the steelworkers of the United States, maneuvered to prevent any party, except Cleveland-Cliffs, from acquiring U.S. Steel and to damage the Pittsburgh manufacturer's ability to compete.
Nippon and U.S. Steel stated in the lawsuit that they submitted three drafts of national security agreements to the Committee on Foreign Investment, an agency that reviews proposed foreign investments in the United States for potential national security risks, to address any concerns.
The companies stated in their lawsuit that CFIUS was told not to offer counterproposals or engage in discussions with them. Nippon and U.S. Steel argue that the review process was manipulated to support a decision that, they claim, Biden had already made.
The companies said that President Biden used "undue influence to advance his political agenda."
However, Japan will face an incoming administration that has also promised to block the agreement.
Last month, President-elect Donald Trump emphasized his intention to block the agreement and promised to use tax incentives and tariffs to strengthen the iconic American steel manufacturer.
Trump had promised at the beginning of the presidential campaign to block the agreement "instantly," and reiterated that sentiment in a post on his Truth Social platform in early December.