Nippon and US Steel fight Biden in court over $15 billion deal cancellation

In late December 2024, the U.S. government blocked a $15 billion merger between Nippon Steel and U.S. Steel on national security grounds. This unprecedented action against an ally sparked significant backlash from both steel companies, who labeled the review process as a 'sham.' They filed a lawsuit against the Biden administration, alleging that the president’s intervention was politically motivated and aimed at appeasing the United Steelworkers union, which opposed the merger. The companies contend that this blockage undermines the integrity of U.S. steelmaking and accuse the rival bidder Cleveland-Cliffs of engaging in illegal tactics to thwart their merger plans. The lawsuit claims that Biden, alongside the Committee on Foreign Investment in the United States (CFIUS), compromised the integrity of the review to follow a personal agenda rather than the stipulated national security concerns. Despite Biden's stated commitment to protecting American steel jobs, the steel companies argue that his motives were influenced by union pressures, especially since they had opted for Nippon’s higher offer over Cleveland-Cliffs' bid. This situation marks a significant instance of government intervention in foreign investments related to critical American industries, raising questions about the transparency of the review processes. The United Steelworkers union's opposition is rooted in concerns about Nippon Steel's trade history, which they claimed includes practices that harmed the domestic steel market, such as dumping products. The union supported the merger’s blockage, asserting that its primary focus is the long-term stability of jobs in American facilities. As a result of this legal battle, U.S. Steel's CEO criticized Biden's decision as misaligned with the interests of American workers and charged that it could have adverse effects on the company's future viability. In addition to the lawsuit against the Biden administration, U.S. Steel and Nippon Steel have accused Cleveland-Cliffs of coordinated efforts to monopolize the domestic steel market through unfair and potentially illegal competition. The intense rivalry among these companies is emblematic of the struggles within the steel industry and reflects broader concerns about national security alongside economic implications tied to foreign ownership and control. The companies are advocating for a new review of their merger and insist that it would not have jeopardized national security, despite the government's stance. This dispute highlights ongoing tensions between domestic interests, political maneuvering, and international business relations within the steel sector.