U.S. Steel and Nippon Steel have initiated legal action against the Biden administration following the president's decision to block their proposed $15 billion merger. The lawsuit claims that the administration's move, made under the guise of national security concerns, is politically motivated and represents a violation of their rights to a fair review process in light of the Committee on Foreign Investment in the United States (CFIUS) not reaching a consensus regarding the potential risks involved.

The lawsuit was filed in the U.S. Court of Appeals for the District of Columbia and the U.S. District Court for the Western District of Pennsylvania. The companies argue that the acquisition will “enhance, not threaten, United States national security,” as noted in their statement. Nippon Steel had pledged to invest $2.7 billion to modernize and maintain U.S. Steel's operations, promising significant benefits to the American steel industry, which currently faces challenges from competitors, especially from China (source: AP News).

President Biden justified his ruling by asserting that a strong domestically owned steel industry is essential for national security, arguing that “without domestic steel production and domestic steel workers, our nation is less strong and less secure.” This stance has been met with criticism, particularly given that the deal would involve a partnership with Japan, a key ally (source: BBC).

The lawsuits also point to alleged collusion by David McCall, the head of the United Steelworkers union, and Cleveland-Cliffs Inc., a rival company. They claim these parties engaged in “anticompetitive activities” to thwart the merger, driven by political motivations rather than actual national security concerns. Nippon and U.S. Steel stated that the motivations behind Biden's blockade are primarily political, as they have effectively engaged with officials to address any concerns regarding the merger (source: New York Times).

Despite the rejection from the Biden administration, both companies are firm in their resolve to see the merger through, citing the positive impact it would have on job creation and the American economy. CEO Eiji Hashimoto of Nippon Steel stated, “We are convinced it’s clearly beneficial for both nations.” They believe that future collaboration would not only strengthen their competitive edge but also enhance the overall stability of the domestic steel market amidst rising global challenges (source: CBS News).

As the lawsuits unfold, the companies are seeking a new review process that is free from political pressure, anticipating that a court ruling might favor their position. Analysts note that the outcome could have significant implications for foreign investment in the U.S. and for the American steel industry as a whole (source: ABC News).