Novelis Inc., the US-based subsidiary of Aditya Birla group’s Hindalco Industries Ltd, said it was committed to closing its proposed acquisition of Aleris Corp. despite the US Department of Justice (DOJ)’s lawsuit to block the deal.

Novelis intends to vigorously defend against the DOJ’s challenge, which it believes is without merit," the world leader in aluminum rolling and recycling said in a statement. The company is set to go into arbitration with the DOJ and, if that doesn’t work, it will consider offering concessions. Novelis reiterated that it intends to close the transaction by 21 January 2020, the outside date under the original merger agreement.

According to a Reuters report late on Wednesday, the US Justice Department has filed a lawsuit aimed at stopping Novelis Inc.’s proposed $2.6 billion purchase of Aleris Corp. because of concerns over higher prices of aluminum sheet used to make cars.

The DoJ said the deal would combine two of the four major North American producers of aluminum to make automobile bodies. It said Ohio-based Aleris was an “aggressive competitor" and the deal would give Novelis up to 60% of projected domestic capacity.

Novelis argued that the justice department lawsuit “ignores competition from steel automotive body sheet, even though steel automotive body sheet is currently used for nearly 90% of the market".

“Our merger with Aleris threatens no one, and to the contrary will strengthen our ability to compete against steel, meet growing customer demand for aluminum, achieve our recycling goals, and bolster our sustainability platform worldwide," said Steve Fisher, president and CEO, Novelis.

The DOJ’s contention is that in cases where an automobile manufacturer has already picked aluminium over steel, it constrains procurement for the manufacturer by shrinking the market.

In response, Novelis argued that by focusing on just a small slice of steel-aluminum competition, while ignoring the broader competitive process, “the DOJ’s theory contravenes well-established principles of market definition".

Novelis also said the DOJ also disregards the extraordinary bargaining power of the automotive manufacturers and their ability to generate bid processes that will ensure competitive pricing for automotive body sheet.

In the statement, Novelis said it has reached an agreement with the DOJ on a timetable and process for resolving this dispute.