Italy Investigates Pirelli’s Chinese Investor Over Potential Governance Breach

A Pirelli tire is pictured at a tire specialist center in Turin, Italy, on March 18, 2014. Giorgio Perottino/Reuters

Italian tiremaker Pirelli announced on Wednesday that a government investigation had been launched into the company’s largest shareholder over concerns that the Chinese investor may have breached Italy’s “golden power” rule.

Sinochem, China’s largest state-owned chemical company, now owns a 37 percent stake in Pirelli. Camfin, the company’s second-largest shareholder, holds a 25.7 percent stake. Camfin is headed by Italian businessman Marco Trochetti Provera, who has been in charge of Pirelli since 1992 and now serves as executive vice chairman.

According to Pirelli, China National Tire and Rubber Corp (CNRC), a subsidiary of Sinochem, received a notice from Italian Prime Minister Giorgia Meloni’s office on Oct. 31 of the investigation.

In 2023, the prime minister issued a special decree under Italy’s “golden power” rule to safeguard the country’s strategic assets and limit Sinochem’s influence on Pirelli. The rule allowed Pirelli to set up an autonomous security unit and required certain board decisions to pass an 80 percent vote.

The matter was one of national strategic interest, according to the Italian government, as the tires produced by Pirelli consist of sensors that are able to collect vehicle data, including road layouts, geolocation, and the state of infrastructure.

According to the government, the information gathered could be used to create complex, cutting-edge models of cities and is crucial for various high-tech sectors, including industrial automation, machine-to-machine communication, machine learning, advanced manufacturing, artificial intelligence, critical technology for sensors and actuators, and big data and analytics.

“Improper use of this technology can entail significant risks not only for the confidentiality of user data, but also for the possible transfer of significant security information,” the government statement reads.

According to Pirelli, CNRC “maintains to have always respected the measures of the DPCM Golden Power and is confident that it will clarify its position during the procedure.”

The government has 120 days from the date it issued the notice to conclude its investigation, Pirelli said.

Analysts at Bernstein brought up the possibility that the government may force Sinochem to divest its shares.

“If a sale was forced, we expect this asset would likely be attractive ... given the strength of premium tyres and the long-term story,” they said in a note.

The investigation comes on the heels of the European Union (EU) raising tariffs on Chinese-made electric vehicles after a year-long investigation concluded that the Chinese communist regime had substantially subsidized the production of these vehicles across the supply chain, allowing manufacturers to sell them at injuriously low prices on the European market.

In response, Beijing filed a complaint at the World Trade Organization (WTO), accusing the EU of violating WTO rules and moving for a dispute settlement. The European Commission maintains that its investigation complied with EU and WTO rules and standards.

The Epoch Times has reached out to Sinochem for comment.

Reuters contributed to this report.