The $16.2-billion deal that would have brought together LVMH Moët Hennessy Louis Vuitton and Tiffany & Company, which would have been the biggest acquisition ever in the luxury sector, is cratering.

On Wednesday, LVMH said it was withdrawing its offer to buy Tiffany, while Tiffany said it had filed a lawsuit to force the luxury giant to move forward with its offer.

There has been concern for months that LVMH would seek to renegotiate the deal, which was announced last November, in light of the stress the pandemic has put on the jewellery business.

LVMH said in statement on Wednesday that it couldn’t complete the deal “as it stands”, citing a request from the French government to delay the deal beyond January 6, 2021, because of the threat of US tariffs on French goods.

In a filing with the Securities Exchange Commission, Tiffany said that while LVMH had informed the jeweller that it had received a letter from the French government to delay the deal, the company had not yet seen a copy of that letter.

Tiffany’s lawsuit, filed in the Delaware Court of Chancery on Wednesday, claims that LVMH is in breach of its contract relating to obtaining antitrust clearance. It rejects the idea that LVMH can avoid the deal by claiming that Tiffany has undergone a “material adverse effect” that would have breached its deal obligations. The lawsuit also says that LVMH cannot avoid completing the deal because it is inconsistent with its patriotic duties as a French company.

Tiffany decided to sue LVMH over frustration that 10 months after the agreement, it had not yet filed for antitrust approval in the European Union, a source said.

The proposed acquisition appeared to be a savvy move by LVMH, the world’s largest luxury goods company by sales.