The government has exercised the golden power again on the tire company Pirelli to limit the influence of the Chinese state-owned company Sinochem, the largest shareholder with a stake of 34.1 percent. Today, on the Milan stock exchange, the stock fell by almost 1 percent.
WHY IS PIRELLI STRATEGIC?
The term golden power refers to the set of special powers that allow the executive branch to protect assets of strategic value to the country. Pirelli’s “strategic” nature is mainly linked to Cyber Tyre, tires equipped with sensors capable of collecting data and “communicating” in real time both with the car’s onboard systems and with smart road infrastructures.
THE INTERNAL BATTLE OVER CYBER TYRE TIRES…
An internal regulatory battle took place within Pirelli around Cyber Tyre: Sinochem proposed to spin off the smart tire activities, but the idea was not liked by Marco Tronchetti Provera, the company’s executive vice president and second largest shareholder – through the holding companies Camfin and Mtp Spa – with 26.2 percent.
Last February, Pirelli’s board of directors decided, with nine votes in favor and five against, that Cyber Tyre activities “must continue to be carried out and developed in a fully integrated manner, also on a functional and organizational level, with all other activities” of the group.
… AND THE RISK OF A BAN IN THE UNITED STATES
In all this, Pirelli is trying to avoid a ban on its products in the United States, a very important market for the company as it accounts for about one fifth of its revenues. The Americans have banned the sale of Chinese technologies for “connected vehicles” for security reasons: this regulation directly affects Pirelli because – as mentioned – its main shareholder is a Chinese state-owned company.
WHAT THE NEW GOLDEN POWER ON PIRELLI PROVIDES
The Giorgia Meloni government already intervened with the golden power on Pirelli in June 2023: the measure concerned both the preservation of critical technologies (the aforementioned Cyber Tyre sensors) and the protection of the company’s autonomy from Sinochem’s influence (and indirectly from the Chinese Communist Party). In October 2024, the government also opened an administrative procedure on Pirelli, which was then closed last September after determining that Sinochem had not compromised the management autonomy of the Milanese company.
The new golden power procedure, announced on April 10, further limits Sinochem’s influence on the company, preventing it from appointing more than three directors (two of whom must be independent) to the board of directors and from having a say in top roles (i.e., CEO and chairman). The remaining twelve board members will be appointed by Tronchetti Provera’s Camfin, which will thus effectively gain control over Pirelli’s direction despite having a much smaller stake in the shareholding.
WHAT CHANGES FOR SINOCHEM…
Sinochem will be able to appoint only three directors to Pirelli’s board of directors, and none of them may have delegations or powers that allow participation in financial, industrial, or strategic decisions.
The restrictive measures will remain in force until Sinochem reduces its stake in Pirelli below 10 percent, a threshold that could ease conflicts with American law: at that point, the Chinese company would no longer be the controlling shareholder of Pirelli but a minority investor.
… AND WHAT CHANGES FOR PIRELLI
The golden power also imposes requirements on Pirelli, which must – it reads – refuse to implement “any managerial or organizational initiative coming from entities attributable to the State-owned Assets Supervision and Administration Commission of the State Council (‘Sasac’) of China.” For example, it must not share sensitive information on research and development activities, intellectual property, and technological know-how. It must also prohibit access to management-administrative IT systems and prevent the transfer of goods and services – as well as data obtained from Cyber Tyre – to non-European infrastructures or those linked to the Chinese government.
Furthermore, each year, within thirty days of the approval of the financial statements, Pirelli must send the ministry of Enterprises “a report prepared by the Board of Directors communicating the measures adopted in compliance with the determinations made with the Golden Power Dpcm and any other relevant corporate or company measures in relation thereto.”
THE DOUBTS
According to Luca Picotti, analyst at the Golden Power Observatory, the new government measure on Pirelli raises at least two uncertainties. “On one hand,” he explained to Ansa, “it must be understood whether this intervention will be accepted by the Chinese or challenged before the Lazio Regional Administrative Court, although administrative jurisprudence has so far shown, in cases involving Chinese counterparts, a sensitivity to public interests (Syngenta, Manta Aircraft).”
“On the other hand,” he added, “it remains to be seen whether this intervention will be sufficient to guarantee the American market, that is, to convince the US that the formal majority held by the Chinese shareholder no longer signifies a significant link, since on the management and administrative front the rights are basically neutralized.”
