Italy’s PM Draghi vetoes technology transfer to China

Italy’s prime minister, Mario Draghi, has vetoed a transfer of technology and software to China in a deal involving industrial robot maker EFORT Intelligent Equipment 688165.SS, according to a Shanghai filing and a source close to the matter.

The rebuffed group earlier this year announced a deal to raise its stake to 49% from 40% in Italian firm ROBOX, which designs and manufactures electronic components for robotics and motion control systems.

In addition to the increased ownership stake worth 2 million euros ($2.14 million), the deal envisaged that ROBOX would authorise EFORT to use some of its source codes.

However, Draghi’s government has prevented ROBOX from agreeing to the technology transfer to China, the source said, while raising no objections to the increased shareholding.

The filing made reference only to the government veto, without specifying what part of the deal was rejected.

Italy reserves the right to use its anti-takeover legislation, or so-called golden powers, to ward off undesired bids in industries deemed of strategic importance such as banking, energy, telecoms and health.

With the addition of the ROBOX case, Rome has stopped foreign interests in Italy seven times since the introduction of the golden powers in 2012. Six of these episodes beat away Chinese bids and five have been under Draghi’s government.

In March, Draghi annulled a 2018 sale of a military drones company to Chinese investors.

However, Draghi’s approach has triggered legal challenges from both foreign acquirers and their Italian targets.

The notification requirements have also increased red tape for firms, which in order to avoid the risk of infractions and fines are informing the government of any mergers and deals even when it would not be necessary, officials have told Reuters.

Last year the number of notifications jumped to almost 500, compared with 342 in 2020 and just 83 in 2019.

($1 = 0.9362 euro)