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DOJ Scrutinizes US Steel Sale to Japanese Rival Amid Antitrust Concerns

 |  March 18, 2024

The proposed sale of US Steel to its Japanese competitor Nippon Steel is now under intense scrutiny by the US Justice Department over potential antitrust issues, as reported by Politico.

The $14.1 billion deal has ignited a firestorm of criticism from various quarters, including lawmakers, labor unions, and concerned citizens, who argue against the acquisition of the iconic American industrial giant by a foreign entity, even one from a close ally like Japan. President Joe Biden has weighed in on the matter, issuing a rare statement emphasizing the importance of US Steel remaining under American ownership and operation.

The United Steelworkers union, a significant player in American politics courted by both Biden and former President Donald Trump during their respective campaigns, has vehemently opposed the deal. The union contends that the acquisition poses a threat to US jobs and the integrity of the American steel industry.

While concerns about foreign ownership of U.S. Steel have garnered significant attention, the current antitrust scrutiny focuses on a major manufacturing facility located in Calvert, Alabama. This plant, jointly owned by Nippon Steel and Luxembourg-based ArcelorMittal, is a key competitor to U.S. Steel, particularly in the automotive sector. Department of Justice attorneys have reportedly initiated inquiries with industry stakeholders, seeking insights into how the proposed joint venture between Nippon Steel and U.S. Steel would impact competition in the market.

Sources familiar with the matter, speaking on condition of anonymity due to the sensitive nature of the discussions, indicate that the antitrust review is still in its preliminary stages. The Justice Department has yet to commence a formal, in-depth investigation, and there remains a possibility that it may decide against such action. A final decision is anticipated later this month, according to reports from Politico.

The backdrop of this scrutiny includes previous attempts by other industry players to acquire U.S. Steel. Notably, U.S. Steel rebuffed a takeover bid from Cleveland-Cliffs, partly citing concerns about its ability to withstand antitrust scrutiny.

Cleveland-Cliffs, ArcelorMittal, and U.S. Steel are among the primary suppliers to the automotive sector, making any potential consolidation or acquisition in the industry a matter of considerable importance and scrutiny.

Source: Politico