EU rejects claims Pirelli isn’t related to CNRC and Aeolus

Having published its definitive decision on Chinese-produced truck tyre dumping, the European Union has also rejected claims that Pirelli is not related to either China National Tire & Rubber Co., Ltd (CNRC, which is owned by ChemChina) or Aeolus. Therefore, any tyres made by any of the related companies in China have to be subject to comparable import tariffs.

After clarifying that Pirelli Tyre Co., Ltd. is not a subsidiary of the Aeolus Group (something the EU established in a correction document published in July 2018), the EU went on to explain: “The relationship between exporting producers is analysed in accordance with Article 127 of Commission Implementing Regulation (EU) 2015/2447 (9). Therefore, in the context of this investigation, Pirelli Tyre Co., Ltd and Aeolus Tyre Co., Ltd are considered to be related since both had a common shareholder during the investigation period — namely China National Tire & Rubber Co., Ltd [otherwise known as ChemChina].”

Pirelli had claimed that it should not be considered as a related company of CNRC and the Aeolus Group on the basis that the Italian-based tyremaker “disagreed with the application of Article 127 of Regulation (EU) 2015/2447 for the purpose of calculating a weighted average dumping margin established for the related companies”. Pirelli proposed the use of Article 4 of Regulation (EU) 2016/1036 (the ‘basic Regulation’) to establish the relation between companies.

However, the EU decided that Pirelli could not be described as a union producer because it “is not considered part of the Union industry, if it is controlled by an exporting producer”. The point of such distinctions, the 50-page EU 2018/1579 document adds, is that “it avoids the risk that exports are channelled through a related company with a lower anti-dumping duty.”

According to the EU, “two persons are deemed to be related if: a third party directly or indirectly owns, controls or holds 5  per cent or more of the outstanding voting stock or shares of both of them. CNRC is the largest shareholder of Pirelli. During the investigation period, CNRC owned 65 per cent of Pirelli’s shares. As of September 2018, it still held 46 per cent of Pirelli’s shares. Therefore, in the context of this investigation, Pirelli and the Aeolus Group are considered to be related through a common parent company (CNRC).” Therefore, Pirelli’s claim that it should not be considered as a related company and just a cooperation exporter of CNRC was rejected.