President Joe Biden signed a comprehensive executive order in July 2021 aimed at cracking down on anti-competitive business practices. declared “Capitalism without competition is not capitalism, it is exploitation.”
it would be something catchphrase In preparation for Biden’s inauguration as president and as a mission statement to his appointees. Biden administration’s Department of Justice prevented the merger It decided to buy JetBlue and Spirit Airlines because consumers would be harmed by consolidation in the low-cost airline industry. At the Federal Trade Commission, Lina Khan, a commissioner appointed by Biden, has launched a campaign against mergers and acquisitions of all kinds. Biden: “Capitalism without competition is not capitalism” reminded everyone He announced plans to increase competition for geese in the meat processing industry in 2022.
But one of Mr. Biden’s final executive actions toward withdrawal lays the groundwork for a major restructuring of the American steel industry. In blocking Nippon Steel’s acquisition of U.S. Steel, Biden appears to have thrown concerns about competition and integration out the window.
At first glance, that may seem counterintuitive. how prevent Will mergers lead to further consolidation?
The answer lies in third parties who played a key role Exploding U.S. Steel and Nippon Steel deal: Ohio-based steelmaker Cleveland-Cliffs lost to Japan Participated in a bidding war to acquire US Steel.
It is widely assumed (possibly as of 2020) that the Cleveland Cliffs could acquire U.S. Steel. big discounts) If the Nippon deal doesn’t go through, that would probably explain why the Cleveland Cliffs have lobbied so hard to block the deal. The company has assembled an unconventional alliance of politically connected allies, including labor unions and environmental groups, to strengthen its own significant lobbying efforts.
If Cleveland-Cliffs ultimately acquires U.S. Steel, it will have a near monopoly on a variety of steel products produced in the United States. This, combined with the fact that steel imports are more expensive due to tariffs and other trade barriers, means that industries that consume steel will have few options to meet their needs.
Of course, that’s exactly what Cleveland Cliff is hoping for. “The Cleveland-Cliffs-US Steel combo will control 100% of U.S. blast furnace production, 100% of domestic steel used in electric vehicle motors, and 65% to 90% of other domestic steel used in automobiles. I will.” I wrote wall street journalOn January 3, the magazine’s editorial board said, “Cleveland Cliffs CEO Lourenco Goncalves wants to create a steel manufacturing cartel protected from foreign competition by tariffs and Buy America rules, so he wants to create a steel-making cartel that is protected from foreign competition by tariffs and Buy America rules, so he is asking the White House to make a deal with Japan.” “We lobbied to block the agreement.”
It’s a good deal if you can get it, but it goes directly against the Biden administration’s longstanding campaign against corporate monopolies.
in lawsuit U.S. Steel and Nippon Steel filed a letter Monday challenging Biden’s decision to block the deal, pointing out that Cleveland-Cliffs’ leadership had no hesitation in pursuing anticompetitive goals. There is.
part of the lawsuit claim The Cleveland Cliffs’ senior vice president of finance reportedly told investors that blocking the deal with Japan would “reduce competition and give us one less competitor to drive prices down.”
Separate lawsuit claim Cleveland-Cliffs CEO Lourenco Goncalves told investors in 2023 that becoming the sole U.S. supplier of certain steel products “will drive prices up.”
“If this illegal campaign succeeds, the U.S. economy and U.S. consumers will face significant harm by reducing competition in key steel markets,” the lawsuit alleges.
That’s exactly what Biden and his allies have been warning about since taking office. Greater consolidation would harm consumers and enable companies to engage in price gouging and other unscrupulous and anticompetitive practices.
The big difference is that this time, Biden’s allies in labor unions welcome integration. David McCall, President, International Steelworkers Union was praised Biden’s decision to block Nippon Steel’s acquisition of U.S. Steel and union leaders trying to silence ordinary politicians who recognized it Advantages of acquiring Japan—Like a company based in Japan Commit to invest $2.7 billion In U.S. Steel’s plant upgrades.
This makes it appear that Mr. Biden was willing to abandon one of his administration’s most important economic policy goals just to favor the steelworkers unions. As is often the case, the only monopolies that get government approval seem to be those that the government helped create.
