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Nippon Steel and US Steel have filed two lawsuits in the US alleging “unfair interference” after a proposed $15 billion merger between the steelmakers was blocked by President Joe Biden just days ago.
In a statement Monday, the companies said the first suit was filed BidenThe decision to set aside was due to “illegal political interference” in the process.
A second lawsuit was filed against rival steel producer Cleveland-Cliffs, chief executive Lourenco Goncalves and United Steelworkers president David McCall, alleging “unlawful and coordinated actions aimed at obstructing trade”.
“Today's legal action demonstrates Nippon Steel and US Steel's continued commitment to completing the transaction,” the companies said in a statement.
The legal claims mark the latest change in a saga that has put US-Japan relations under great strain, brought new hostility to the US investment climate and called into question the independence of the US investment inspection system.
According to the command released on Friday to block the deal, Biden said there was “credible evidence” that, with the acquisition, Nippon could take steps that could harm US security.
For debts, Nippon and US Steel aimed to prove that Biden was “ignoring the law” in order to gain favor with unions and support his political agenda and the Committee on Foreign Investment in the US (Cfius), which scrutinizes overseas customers of American companies, failed. do the review in good faith.
The Cfius system was designed to achieve “predetermined outcomes” after Biden expressed his opposition to the transaction in March, before any security review was conducted, the companies added.
They also intend to show that US rival Cleveland-Cliffs tried to prevent any other buyer from acquiring US Steel “as part of a wider illegal campaign to control domestic steel markets”.
Cleveland-Cliffs, a rival US steelmaker, was created an unsolicited offering to buy US Steel in July 2023, after an extensive auction was held in which Nippon came out on top.
USW's McCall said Monday: “By blocking Nippon Steel's bid to acquire US Steel, the Biden administration has protected vital US assets, protected our national security and helped preserve a domestic steel industry that supports our nation's vital supply chains.” He added that the organization is “investigating the complaint and will vigorously defend itself against these baseless allegations”.
Cleveland-Cliffs did not immediately respond to a request for comment.
The legal action came after Biden blocked the deal because Cfius failed to reach an agreement on whether the deal posed a threat to national security.
Nippon made extensive efforts to address those concerns by pledging to invest 2.7 billion to upgrade facilities and ensure that there are no production cuts in many areas for 10 years without the approval of the US government.
Biden's decision to cancel Nippon's takeover of the famous US automaker threatens to stir up chaos in the union and business relations with the most important US partner in East Asia and the largest foreign investor.
Japanese Prime Minister Shigeru Ishiba warned at a press conference on Monday that the US should clearly explain why there are security concerns and said its ban sent a shocking message to would-be Japanese investors in the US.
“It is unfortunate that voices of concern are being raised in the Japanese manufacturing sector about future investment in the US,” he said. “We cannot help but take these concerns seriously and urge the US government to address these concerns.”
US presidents have vetoed eight other takeover deals after Cfius review since 1990, according to the Congressional Research Service, but none by the Japanese company until last week.
There is precedent for the US government becoming embroiled in a legal battle after the president blocked a takeover deal.
In 2015, Chinese-owned Ralls won a settlement after claiming the US government violated due process when it was ordered to evacuate four wind farms near a military base in Oregon following a Cfius review.