The “Ariston Case”: the Kremlin threat and European industrial security.

Translated by Irene Cecchi

Last April, the Italian Ministry of Foreign Affairs (MAECI) summoned the Russian Federation ambassador in Italy, Alexey Paramonov, in order to prevent a state of crisis in the economic relations between the two countries after the administration of the Ariston Group, an italian corporation that produces and sell thermal solution for space heating, was temporarily switched in an admission procedure. The Russian ambassador was welcomed in the last two months by Riccardo Guariglia, Secretary General of the MAECI, who asked him to reconsider the measures of the Russian government against Italian companies. The Minister for Foreign Affairs and Vice-president of the Council of Ministers, Antonio Tajani, took action to solve the situation and declared: “We reached a first important goal to support Italian companies that work in the Russian Federation, regarding the package of sanctions against Russia. We have two companies in this situation: Ariston and Unicredit. Today wins the principle according to which companies affected by the sanctions can be refunded; this is just a legal basis and we have yet to understand where the money will come from but the fact that the principle has been recognised is already an important win for Italy that has long fought in the European Union for all the 200 companies that are legally working in Russia. We have to protect them.”

On a transnational level, the European Union aligned with the Italian government and issued a statement declaring that these hostile Russian actions are against tìinternational law since they interfere with multilateral trade relations. The European Commission is also working on a wide measure to protect its member states’ companies affected by these actions.

What happened? The case started when the Russian branch of the Ariston Thermo Rus company has been affected by the presidential executive order n.294 of April 26th 2024 enacted by the Kremlin: this made the administration of the branch switch from the Italian main company to the Russian Gazprom Household System, an appliance division of the billion dollars worth natural gas company Gazprom handled by the Russian Federation. This law allows the public power to take control of national companies or those foreign companies that are partially state-owned by countries considered “hostiles”. According to the law text in the Official Journal, the change should be provisional, meaning that for a non specified time frame (generally around a year) an external actor-investor, like a public authority or a private company partially state-owned, participates in the company governance with a special commissioner. In case of a risk for the strategic sectors of economy and industry, governments can intervene with effective immediate measures to protect the national security from external “aggressions”. For example, a similar situation happened in Italy in December 2022, during the raw material crisis. The Council of Ministers, along with the Economy Ministry and the Ministry for Business and Made in Italy, issued exceptional measures to support companies working in strategic fields in order to ensure the national energy supply and infrastructure security.

In the Ariston case, instead, the Kremlin excuse is linked to the Russian position against the US in the international framework due to the conflict in Ukraine. Several observers described what happened as a concrete answer to the current EU sanctions and seizure of financial assets in European banks. But Ariston is a private company and all foreign shareholders do not work in strategic sectors. The provisional administration seems a gimmick to reduce the governance of European branches working in Russia: it is practically a direct interference of the State in the private sector that the most critical ones defined as “expropriation”.

The Ariston Group

Founded in Fabriano in 1930, a branch of the company called Ariston Thermo Rus operates in Russia making boilers and hot water heaters in Vsevolozhsk, located in the North-East region of Saint Petersburg. The branch does business with an office in Moscow that manages a hundred employees in the sales department. At the end of 2023 Ariston welcomed two hundred new employees in the Federation branches after closing the year with a revenue of 100 million euros in the Country, equivalent to 3% of the total. Commenting on the events, the company management declared: “After Reuters published the news, the company took the presidential executive order n.294 signed by Putin and published in the Russian Official Journal. The Ariston Group, legally active in the Country and in fair relations with local institutions, was not previously informed about the decree. Surprised by the initiative, the company is considering the implications, from a governance and managing perspective too”.

This case depicts a dangerous event regarding an Italian company after the beginning of the war in Ukraine, regardless of the strong commercial partnership between Italy and Russia. But this is not the first case happening after the decree was issued in April 2023: the German Bosch Hausgeräte GmbH, the French Danone and later in July the Danish Carlsberg were also affected. Same purpose, different means: the German and Danish companies have been passed under the control of the Russian Federal Agency for State Property Management, called Rosimushchestvo, while the German and Italian giants are now managed by the non-governmental agency Gazprom. Regarding Danone, the executive order was delayed thanks to the decision of alienating the Russian branch shares to an oligarch aligned with the Kremlin for a fair price. In the Ariston case, they found a way thanks to the legal address registered in the Netherlands, claiming that this is why the company can not be considered Italian but Duch instead.

A way out

The main risk is that this phenomenon may spread in the next years at the expense of other big European companies: Moscow’s strategy is to get back at Europe for every sanction, centralizing under the State control every time more power through economic and industrial assets. Russia is using legal means but the actual actions are basically interferences in the private market since they give branches of foreign companies to State oligarchs for very downwarded prices. The European economic diplomacy with Russia is challenged: the EU must find a strategic action, a regulatory instrument to protect member states’ companies from Moscow’s Risk game.

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