In a dramatic legal move, Nippon Steel and US Steel filed lawsuits against President Joe Biden on Monday, accusing the President of overstepping his bounds and infringing upon their constitutional rights. The steel giants argue that Biden’s decision to block $14.9 billion Nippon Steel and US Steel merger violates their right to due process and is part of a corrupt scheme to secure political backing for his reelection campaign.
In a second legal filing, Nippon Steel and U.S. Steel also targeted Cleveland-Cliffs, its CEO Lourenco Goncalves, and United Steelworkers (USW) President David McCall, alleging that they actively conspired to thwart Nippon Steel’s acquisition of U.S. Steel. The lawsuit claims that Goncalves and McCall were involved in antitrust violations and racketeering activities as part of a broader strategy to eliminate competition and gain control of the domestic steel market.
Biden’s Block of Nippon Steel and US Steel Merger and the National Security Argument
This legal action follows President Biden’s controversial announcement on Friday that he would prohibit Nippon Steel from acquiring U.S. Steel due to national security concerns. According to the White House, a review by the Committee on Foreign Investment in the United States (CFIUS) concluded that the merger posed a risk to U.S. security by potentially reducing domestic steel production. The concern was that, without sufficient steel production, industries critical to national infrastructure, such as energy, agriculture, and transportation, could face shortages.
However, Nippon Steel and U.S. Steel argue that the national security concerns raised by the President are nothing more than a cover for political maneuvering. They claim the real reason behind the rejection is to appease the USW, which strongly opposed the merger and had endorsed Biden’s reelection campaign. This, they say, has led to an unjust decision aimed at furthering political goals rather than addressing genuine national security risks.
In a statement, White House spokesperson Robyn Patterson defended Biden’s actions, asserting, “This acquisition would create a risk for American national security.” Despite this, the steel companies have strongly rejected the President’s claims, alleging that political interests were prioritized over legal and economic considerations.
Legal Strategy: Seeking a Swift Reversal
In their lawsuits, Nippon Steel and U.S. Steel are employing a two-pronged approach to challenge Biden’s decision. The companies are seeking expedited legal proceedings, hoping for a swift resolution that would force a fresh government review of the proposed merger. They are asking a federal judge to act quickly and overturn Biden’s veto, potentially by this spring.
The companies are also hoping to use the legal discovery process in their second lawsuit against Cleveland-Cliffs to obtain key communications between the Biden administration and Cleveland-Cliffs executives. They believe that these documents could provide vital evidence of political interference in the review process, reinforcing their argument that the government’s actions were motivated by political needs rather than genuine national security concerns.
According to sources familiar with the companies’ strategy, their goal is to gather evidence that shows improper conduct by the Biden administration, which they hope could prompt a reconsideration of the deal. With President-elect Donald Trump set to take office in two weeks, the companies are optimistic that a new administration may be more willing to revisit the deal and allow the merger to proceed, potentially with modified terms to address the government’s security concerns.
Cleveland-Cliffs and the Fight for Market Control
The second lawsuit filed in Pennsylvania accuses Cleveland-Cliffs, Goncalves, and McCall of conspiring to sabotage the Nippon Steel acquisition as part of a broader effort to monopolize the domestic steel industry. Cleveland-Cliffs had previously made its own unsolicited bid for U.S. Steel, which was initially backed by the USW. However, when Nippon Steel outbid Cleveland-Cliffs, the latter’s efforts to derail the merger intensified.
The legal complaint describes Cleveland-Cliffs’ strategy as “merge or murder,” arguing that the company either wanted to force U.S. Steel into a merger or prevent it from forming a partnership with Nippon Steel. The companies claim that Goncalves and McCall engaged in a public campaign to undermine the Japanese steelmaker’s bid, thus clearing the path for Cleveland-Cliffs to take control of the market.
In their filing, the steelmakers allege that Goncalves, a Brazilian executive who became Cleveland-Cliffs’ CEO in 2014, repeatedly assured investors that Nippon Steel’s bid was doomed, even calling the CFIUS process a “cover” for Biden’s decision to block the deal. The companies argue that this public campaign was part of a larger strategy to weaken Nippon Steel’s position and facilitate Cleveland-Cliffs’ control over the steel industry.
Political Implications and the Role of the U.S. Steelworkers Union
At the core of the lawsuits is the accusation that Biden’s decision was influenced by political considerations rather than national security concerns. The steelmakers argue that the President’s actions were motivated by a desire to secure the endorsement of the USW, which strongly opposed the merger and had backed Biden’s reelection bid.
The companies point to Biden’s public statements during his 2024 campaign, where he promised to ensure that U.S. Steel would remain American-owned. This promise came just days before the USW endorsed him for president, raising questions about the timing and motivations behind Biden’s opposition to the deal. The steelmakers claim that this was a deliberate attempt to appease the union in an election year, rather than a legitimate concern for national security.
The lawsuit also names CFIUS and senior government officials, including Treasury Secretary Janet L. Yellen and Attorney General Merrick Garland, accusing them of allowing political interference to shape the outcome of the review process. According to the companies, the government’s refusal to engage in good-faith negotiations or offer meaningful feedback on their proposals further underscores the flawed nature of the review process.
Next Steps: The High Stakes of Steel Industry Consolidation
As the legal battle heats up, Nippon Steel and U.S. Steel are pushing for a preliminary injunction to prevent Cleveland-Cliffs from continuing to disrupt the deal. They are also seeking damages that could run into billions of dollars if their case succeeds. The companies argue that the merger would strengthen the domestic steel industry, allowing them to compete more effectively on the global stage and ensuring a stable supply of steel for critical U.S. industries.
The outcome of this case could have far-reaching implications not just for the steel industry but for the broader U.S. economy. If the merger is allowed to proceed, it could reshape the U.S. steel market and enhance America’s ability to compete internationally. On the other hand, if Biden’s decision stands, it could set a precedent for how future foreign investments in critical industries are handled.
In the coming months, as the lawsuits progress, the steel industry, political analysts, and global markets will be closely watching the developments. With the transition to a new administration, the final outcome of this legal showdown could alter the course of the steel industry and set a significant precedent for corporate mergers and national security reviews in the U.S.
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