Nippon Steel and US Steel have sued the US government for blocking the takeover, saying President Joe Biden “disregarded the law to curry favor” with labor unions.
The two companies also alleged that President Biden, who is entering the final weeks of his administration, stopped Nippon Steel from buying US Steel to further his political agenda.
By rejecting the proposed agreement on FridayPresident Biden said a strong domestic steel industry is critical to national security and strong supply chains, including the auto and defense industries.
If the $14.9bn (£11.8bn) deal goes through it could create one of the biggest steel companies in the world outside of China.
The takeover has been in limbo since it was first announced in December 2023.
In another case, Nippon Steel and US Steel asked the court to set aside the review process of the Committee on Foreign Investment in the US, which has the power to examine foreign takeovers of American firms, saying it “failed to exercise good faith, a regulatory review process focused on national security”.
Additionally, the companies also accused the president of the United Steelworkers union, David McCall, and the chief executive of rival steel company Cleveland-Cliffs, Lourenco Goncalves, for their “unlawful and systematic actions aimed at obstructing transactions”.
On Friday, the United Steelworkers union said it had “no doubt” that blocking the takeover was “the right move for our members and for the security of our country”.
The union accused Nippon of undermining the U.S. steel industry for decades through measures that included dumping its products on the U.S. market.
Nippon Steel and US Steel said they “engaged in good faith with all parties” to show how the agreement “will improve, not threaten, US national security” and how it will strengthen the US domestic steel industry “against the threat from China”.
They also emphasized that Nippon is willing to invest $2.7bn in Pittsburgh-based US Steel.
President-elect Donald Trump has also said he will block the deal. On Monday, he wrote on Truth Social saying: “Why do they want to sell US Steel now when the prices are going to make it a very profitable and valuable company?”
Earlier on Monday, Japanese Prime Minister Shigeru Ishiba expressed his concern over the US decision to block the takeover and the possible impact it would have on trade relations between the two G7 countries.
“Unfortunately, it is true that we have heard the concerns expressed by the Japanese industry regarding future investment between Japan and the US. We must take this matter seriously,” said Mr. Ishiba.
He added that although it is not appropriate for his government to comment on individual companies: “We must insist on the explanation of why there are security problems, otherwise there will be no progress in future negotiations.”
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