Nippon Steel and US Steel are suing the US government over blocking a takeover, claiming that President Joe Biden “ignored the rule of law to gain favor” with trade unions.
The two companies also alleged that Biden, who is entering the last weeks of his presidency, stopped Nippon Steel buying US Steel to pursue his own political agenda.
In rejecting the proposed deal on Friday, President Biden said a strong domestically-owned steel industry was essential for national security and resilient supply chains, including for the car and defence industries.
If the $14.9bn (£11.8bn) takeover went ahead, it would strengthen Nippon’s ability to compete with China, which produces 60% of the world’s steel.
The White House defended the decision, claiming that foreign ownership of US Steel presented a national security risk.
The takeover has been in limbo since it was first announced in December 2023.
Biden’s decision to officially block the deal delivered on a political promise made during last year’s election – US Steel is based in swing state Pennsylvania – despite concerns it could chill foreign investment and roil relations with key ally Japan.
Nippon Steel and US Steel said Biden voiced his opposition before a formal formal review of the purchase by the government even began, in an effort to “curry favor” with a trade union during his re-election bid.
They asked the court to order a new review, alleging that the process overseen by the Committee on Foreign Investment in the US, which has the power to vet foreign takeovers of US firms, had been “manipulated” to support Biden’s stance.
“As a result of President Biden’s undue influence to advance his political agenda, the Committee on Foreign Investment in the US failed to conduct a good faith, national security-focused regulatory review process,” claimed Nippon Steel and US Steel.
Additionally, the companies are suing the president of the United Steelworkers trade union, David McCall, and the chief executive of rival steel firm Cleveland-Cliffs, Lourenco Goncalves, for “their illegal and coordinated actions aimed at preventing the transaction”.
Mr McCall, who had supported a $7.3bn takeover offer from Cleveland Cliffs in summer 2023, said the accusations were “baseless” and repeated his support of Biden’s decision.
“By blocking Nippon Steel’s attempt to acquire US Steel, the Biden administration protected vital US interests, safeguarded our national security and helped preserve a domestic steel industry that underpins our country’s critical supply chains,” he said.