Italian Government Sues Sinochem Group, Accusing Theft of Strategic Data

Recently, according to foreign media reports, the Italian government has filed an administrative lawsuit against China Chemical Rubber Co., LTD. (CNRC), a subsidiary of China's Sinochem Group, accusing the company of possibly violating regulations to protect the country's strategic assets. The Italian government pointed out that the highly sensitive sensors built into the tires can collect data such as road layout, geographical information and the condition of infrastructure, which is considered to be of strategic importance.

On November 6, Pirelli issued a statement declaring that the lawsuit was launched on the basis of the "golden power" clause, which relates to restrictions on access to information and stricter voting requirements for strategic decisions, which was activated by the Italian government in mid-2023. The CNRC said in a statement that it has always followed the "Golden powers" rules and is confident that all issues will be resolved through the litigation process, while noting that the Italian government has 120 days to publish the results of the investigation.

According to relevant information, since the acquisition of 37% of Pirelli's equity by China National Chemical Group in 2015, China Sinochem Group has remained the largest shareholder of Pirelli tires, with a shareholding ratio of 37.01%; Camfin, Provera's investment company, is in second place with a 25.7% stake; Other institutional investors together hold 23.70 per cent of Pirelli's shares, while retail investors and other types of investors hold 3.69 per cent.

In June 2023, the Italian government officially intervened in the decentralization agreement of tire company Pirelli on the grounds of "national strategic industries" and "national security", restricting the rights of the largest shareholder China Sinochem Group and requiring it not to appoint the CEO of the company. Some media reports say this is the result of active lobbying by Marco Tronchetti Provera, the current CEO of Pirelli, who hopes that the Italian government can help limit the influence of China's Sinochem. The decision was strongly opposed by the Chinese, who saw it as a breach of the acquisition agreement.

Then in August 2023, Pirelli confirmed a new board of directors for a term of office from 2024 to 2025. Jiao Jian, chief executive of Sinochem, Pirelli's largest shareholder, has been nominated as chairman of the board. However, at the request of the Italian government, Sinochem could not choose the chief executive of Pirelli. At present, the Chinese side only gets a portion of the profits and cannot participate in the company's decision-making.