By Aatreyee Dasgupta and Alexandra Alper
(Reuters) – U.S. President Joe Biden violated the Constitution by blocking Nippon Steel’s $14.9 billion bid for U.S. Steel through a fake national security review, the companies are accused in a lawsuit they say. which was filed on Monday.
The companies want a federal court to overturn Biden’s decision to scuttle the deal so they can get another shot at approval through a new national security review without the influence of politics.
The lawsuit alleges that Biden biased the decision of the Committee on Foreign Investment in the US (CFIUS), which examines foreign investments for national security risks, and violated the right of companies to a fair review.
The merger has become increasingly politicized ahead of November’s US presidential election, with Democrat Biden and Republican President-elect Donald Trump vowing to kill it as they woo voters in swing states in Pennsylvania is where US Steel is headquartered. United Steelworkers (USW) union President David McCall opposed the tie.
Trump and Biden both said the company should remain American-owned even though the Japanese company offered to move its US headquarters to Pittsburgh, where the US steelmaker is based, and promised to respect all area agreements between US Steel and USW.
Biden sought to kill the deal to “gain favor with USW leadership in Pennsylvania in his bid for re-election,” the companies said.
“As a result of President Biden’s undue influence to advance his political agenda, the Committee on Foreign Investment in the United States failed to conduct a good faith, regulatory review process focused on national security, ” the companies said in a statement announcing the litigation.
The White House did not immediately respond to a request for comment.
The lawsuit, which echoes claims the companies made in a December letter to CFIUS obtained by Reuters, shows the companies are making good on their threats of litigation and will continue to fight to be approved. the deal.
The outlook is unclear for the case, which has also been targeted by Attorney General Merrick Garland and Treasury Secretary Janet Yellen, who oversees CFIUS. Courts generally give great deference to CFIUS to explain national security, experts say.
The companies also filed a second lawsuit against Cleveland-Cliffs (NYSE:), its CEO Lourenco Goncalves, and USW union President David McCall “for their illegal and coordinated actions” that refers to preventing agreement.
The Department of Justice and the Department of the Treasury, Cliffs of Cleveland and the USW also did not immediately respond to requests for comment.
Last week, Biden blocked the proposed purchase over national security concerns, dealing a potentially deadly blow to the controversial plan after a year of review.
US Steel, founded in 1901 by some of the biggest US magnates, including Andrew Carnegie, JP Morgan and Charles Schwab (NYSE:), linked to the industrial recovery after the Great Depression and World War II.
The company is under pressure after several quarters of declining revenue and profit, making it an attractive takeover target for rivals looking to expand their US market share.