(WASHINGTON) — U.S. Steel and Japan-based Nippon Steel sued the Biden administration on Monday over a decision made last week to block a merger between the two companies.
A proposed $14 trillion acquisition of the second-largest domestic steel producer by Nippon would threaten U.S. national security, the Biden administration said.
The two companies allege in their lawsuit that election-season political considerations undermined formal government review of the merger.
The lawsuit in the U.S. Court of Appeals for the District of Columbia alleges that the Biden administration used the government review process as a pretext to reject the merger as a favor to the United Steelworkers (USW) labor union.
“President Biden’s Order is the culmination of a months-long campaign to subvert and exploit the United States’ national security apparatus for the purpose of keeping a promise made by the President and his advisors to the USW leadership,” Nippon Steel and U.S. Steel said Monday in a statement outlining their lawsuit.
The decision to block the merger came weeks after a federal committee declined to issue a recommendation on the U.S. Steel-Nippon Steel deal, leaving Biden an opportunity to block the agreement.
The Committee on Foreign Investment in the United States (CFIUS), which is tasked with a review of the potential acquisition, shared concerns about the national security risks posed by the loss of a key domestic steel producer.
Biden echoed those national security fears in a statement upon blocking the deal on Friday.
“Without domestic steel production and domestic steel workers, our nation is less strong and less secure,” Biden said.
According to U.S. Steel and Nippon Steel, Biden first announced plans to block the merger in March 2024, before CFIUS began its review of the national security implications of the deal.
USW holds a large concentration of workers in the influential swing state of Pennsylvania, U.S. Steel and Nippon Steel said in Monday’s statement. The union says it currently has 1.2 million members.
“CFIUS engaged in a process that was designed to reach a predetermined result: supporting President Biden’s political decision,” U.S. Steel and Nippon Steel further said in their joint statement Monday.
U.S. Steel and Nippon Steel also filed a second lawsuit against Cleveland-Cliffs, another domestic steelmaker, as well as USW President David McCall, alleging they illegally coordinated efforts to stop the merger.
Cleveland-Cliffs sought a merger of its own with U.S. Steel, the lawsuit alleges. In the absence of such a merger, Cleveland-Cliffs established an agreement with USW to prevent the acquisition of U.S. Steel by Nippon Steel, the lawsuit claims.
The lawsuit, filed in U.S. District Court for the Western District of Pennsylvania, also names Cleveland-Cliffs CEO Lourenco Goncalves as a defendant for his alleged involvement in the coordinated activity claimed by the suit.
“The anticompetitive and unlawful actions were brazen and obvious – consisting of public lies, pressure tactics, and an illegal antitrust conspiracy,” U.S. Steel and Nippon Steel said in their Monday statement.
In a statement on Monday, USW President McCall pledged support for the Biden administration’s decision to block the merger and vowed to fight the allegations leveled against the USW.
“By blocking Nippon Steel’s attempt to acquire U.S. Steel, the Biden administration protected vital U.S. interests, safeguarded our national security and helped preserve a domestic steel industry that underpins our country’s critical supply chains,” McCall said. “We are reviewing the complaint and will vigorously defend against these baseless allegations.”
USW previously applauded the Biden administration’s decision to block the merger after it was announced on Friday.
Cleveland-Cliffs did not immediately respond to ABC News’ request for comment.
Shares of U.S. Steel climbed nearly 4% in pre-market trading on Monday morning. The stock price of Cleveland-Cliffs also climbed about 4% in early trading on Monday.
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