TheChek News Flow

Boss of tomato sauce group urges Brussels to protect farmers hit by ‘unfair’ competition from China’s Xinjiang region

An Italian tomato sauce magnate has urged Brussels to protect farmers from the “unfair” competition posed by cheap paste made in China’s Xinjiang region and restore the “dignity” of Italy’s staple red fruit.

Francesco Mutti, chief executive of the eponymous maker of ingredients including passata, pulp and canned tomatoes, said an EU ban or high import tariffs on the Chinese products were needed to safeguard Italian farmers. In 2021, the US banned tomato paste imports from Xinjiang citing forced labour concerns, but Brussels has not followed suit.

“We should stop the import of tomato paste from China or add a 60 per cent tax on it so that its cost will not be so different from Italian [products],” Mutti told the Financial Times at the headquarters of his 125-year-old family business, which had revenues of €665mn last year.

He warned that Italy’s tomato industry risked being undercut by tomato paste made by Chinese state enterprises in Xinjiang, where the UN human rights commissioner has documented widespread rights abuses against the local Muslim Uyghur minority — including forced labour. Beijing has denied the allegations.

The fourth generation to run the enterprise on the outskirts of Parma, Mutti criticised Brussels for forcing farmers to adhere to strict sustainability rules without shielding them from “environmental dumping” from China.

“We have to teach our farmers how to do better cultivation but we also have to protect them from unfair competition,” said Mutti, whose company only uses Italian tomatoes. “Otherwise the end result will not be to ameliorate the environment but to move our production abroad, where the environment is not protected.” 

China is estimated to account for nearly 23 per cent of this year’s global tomato production — up from about 18 per cent in 2023, according to the World Processing Tomato Council.

Cheap imports are a sensitive issue in Italy, the third-largest tomato producer in the world after the US and China. Chinese tomato paste costs half as much as Italian products. 

In a display of ire last spring, Coldiretti, Italy’s influential farmers’ association, sent a flotilla of small boats to protest over the unloading of tons of Chinese tomato concentrate in the port of Salerno. 

“The competition today is not fair because more than 90 per cent of Chinese tomatoes are produced in the Xinjiang region and labour costs there are very, very low,” said Luigi Pio Scordamaglio, Coldiretti’s director of international affairs. 

“This is unacceptable from the ethical point of view, but also in terms of competition.” 

China’s foreign ministry reiterated that forced labour claims in Xinjiang are “a lie” used by some countries, including the US, to undermine China and suppress the development of Chinese industries. 

“It is hoped that relevant European individuals and institutions will recognise the malicious schemes behind the so-called ‘forced labour’ lie, refrain from tarnishing China’s image and not use this as a pretext to implement trade protectionist measures,” the ministry said. 

Xinjiang’s vast, export-oriented tomato industry grew as part of Beijing’s economic development strategy for the restive western region. The sector’s major players include ChalkIS, a corporate affiliate of the paramilitary Xinjiang Production and Construction Corps Sixth Division, and COFCO Tomato, subsidiary of a vast state-owned agribusiness conglomerate, according to the University of Nottingham Rights Lab and the companies’ websites.

COFCO says its 12 processing plants have capacity to produce 300,000 tons of bulk tomato paste each year. 

About 13 per cent of China’s bulk tomato paste produced is dispatched to the EU, especially Italy, where it is further processed — either by dilution or mixing with local tomato products — and repackaged, primarily for re-export, according to the Nottingham Rights Lab.

Italy’s strict food labelling laws prohibit the marketing of diluted Chinese tomato paste as passata, but incentives to cheat can be enticing, given the price differential.

In a high profile 2021 food fraud case, the Carabinieri police seized 4,477 tons of canned tomato concentrate from a prominent Italian tomato processor that had falsely labelled its wares “100 per cent Italian tomatoes”, despite the addition of Chinese tomato paste.

Coldiretti is pressing for Europe to adopt stricter food labelling laws — to require identifying the origin of major ingredients in processed food — which it believes would allow consumers to make informed choices.  

Mutti, too, supports such rules, needed “particularly for a product in which tomato is the most important element”, he said. 

“The objective is to give tomatoes their dignity,” Mutti insisted, “to take a product that has often been considered a commodity and say, ‘no — tomatoes count!’” 

Michael Kors and Kate Spade owners’ $8.5bn merger blocked by US judge

Decision is a win for antitrust regulators who had argued a deal would strangle competition in ‘accessible luxury’ market

A US judge has blocked the $8.5bn deal between Tapestry and Capri that would have put some of America’s largest fashion brands under one roof, in a big win for antitrust regulators.

Judge Jennifer Rochon’s ruling on Thursday freezes the deal — which would have combined brands including Michael Kors, Kate Spade and Coach — while the Federal Trade Commission conducts its own internal proceedings.

Capri’s stock plunged after the ruling, falling more than 50 per cent in after-market trading. Tapestry’s stock rose 12 per cent after hours.

“Today’s decision is a victory not only for the FTC, but also for consumers across the country seeking access to quality handbags at affordable prices,” said Henry Liu, director of the FTC’s bureau of competition, in a statement. “The decision will ensure that Tapestry and Capri continue to engage in head-to-head competition to the benefit of the American public.”

The FTC first sued to block the deal in April, arguing that the merger would result in higher handbag prices for consumers and a lower quality of products — specifically in a slice of the market the agency defined as “accessible luxury”.

“Antitrust has come into fashion,” Rochon wrote at the start of her 169-page ruling. Her decision rested in part on whether the deal would hamper competition. Combined, the companies would have a market share of about 59 per cent, according to one economist who testified in court, far higher than the 30 per cent threshold that is “considered to threaten undue concentration”.

“That there is a broad market for handbags overall does not negate the existence of a relevant submarket of affordable-luxury handbags,” the judge wrote.

In court, Tapestry and Capri argued that the handbag sector was brimming with competition, not only with other companies in their price bracket, but also with products from high-end brands to more affordable ones.

“Today’s decision granting the FTC’s request for a preliminary injunction is disappointing and, we believe, incorrect on the law and the facts,” Tapestry — the parent of Coach, Kate Spade New York and Stuart Weitzman — said in a statement.

It added that both companies “operate in an industry that is highly competitive”, with pressure from both legacy brands and new entrants. “We intend to appeal the decision, consistent with our obligations under the merger agreement.”

Capri — whose brands include Michael Kors, Versace and Jimmy Choo — did not immediately respond to a request for comment.

Both sides made their arguments during a mini-trial before Rochon in Manhattan last month. While the hearings were only a precursor to further official proceedings, the court’s decision is pivotal for whether the deal goes through at all, since the transaction needs to close by February.

Some investors watched the trial like hawks. So-called merger arbitrage traders, who buy stakes in companies that are being acquired in the hope that the deal will go through and shares will eventually rise, attended the testimony to glean any indication of which way the judge was leaning.

The ruling is also expected to have consequences for fashion houses globally, which before now did not generally worry about antitrust scrutiny. European fashion giants such as LVMH and Kering, for instance, have grown into powerhouses through serial acquisitions.

While handbags are discretionary items and might not have the same impact on shoppers as groceries, Rochon wrote that “downplaying the importance of handbags” ignores that they are “important to many women, not only to express themselves through fashion but to aid in their daily lives”. 

Frédéric Vasseur has led the F1 team’s resurgence, reinvigorating fans and sponsors

Leading Ferrari might appear to be the pinnacle for many in Formula One, but French engineer Frédéric Vasseur has greater ambitions for sport’s oldest racing team.

“The pinnacle is if you win with Ferrari,” he told F1’s Beyond the Grid podcast last year.

Ferrari’s illustrious history weighs heavily. Juan Manuel Fangio, Niki Lauda and Michael Schumacher are among the greats who have raced its famous red cars. But the team, which holds a record 16 constructors’ and 15 drivers’ championships, has failed to add to that tally since 2008.

Vasseur has grappled with learning Italian, though he has played down the significance being a rare non-native to take on the role. He has big shoes to fill. The first Frenchman to lead Ferrari was Jean Todt, who collected 14 of those world titles in an era of glory spanning the 1990s and the 2000s.

Ferrari’s passionate fans ensure that the pressure is unrelenting. But in just his second season in the role as the principal of Scuderia Ferrari, Vasseur has led the team back into contention for the prestigious constructors’ championship, which determines how prize money is divided among the teams.

After finishing first and second at the US Grand Prix in Texas last weekend, Ferrari drivers Charles Leclerc and Carlos Sainz are pushing to catch Red Bull Racing and leaders McLaren Racing.

The team’s resurgence has fuelled a three-way title race with just five races to go, confounding expectations of another year of Red Bull dominance, providing the legions of new fans attracted through social media and Netflix series Drive to Survive with a gripping end to the season.

Vasseur took the job in early 2023, having held discussions with John Elkann, Ferrari chair and CEO of Exor, which owns a leading stake in the luxury car manufacturer and by extension, the F1 team.

“John wanted someone who would create a good team atmosphere. [Vasseur] has removed the blame culture that was undermining team confidence. He has the ability to attract good people,” said a person with the knowledge of Elkann’s thinking.

Vasseur also played an important role in convincing seven-time world champion Sir Lewis Hamilton to join Ferrari, after 12 years at Mercedes.

The Frenchman has known Hamilton, since his days driving in the junior race categories. Putting the sport’s most famous driver in a winning Ferrari would go far beyond creating a buzz at the team by attracting audiences and boosting sponsorship opportunities.

The lack of the team’s F1 success over the past 16 years has failed to dent sales growth at Ferrari. The luxury-car maker’s new €3.6mn F80 supercar already sold out at its launch, and the company is now the fourth most valuable carmaker with a market capitalisation of €86bn.

Nevertheless, a world championship victory would add further momentum to the brand, said analysts.

“It would be a phenomenal morale boost as well to the company. This is a source of pride and the lack of [F1] success in the past has been sorely felt,” said Bernstein analyst Stephen Reitman.

Vasseur was born in the southern outer suburbs of Paris in 1968. A karting crash put him off pursuing a career as a racing driver, and he studied aeronautical engineering at ESTACA, one of France’s grandes écoles, and graduated in 1995, the same year future Ferrari great Michael Schumacher won his second world championship.

He entered the world of motor racing in 1995, building engines for F1’s junior racing series and moving on to launching teams.

Nicolas Todt, the son of the former Ferrari team principal, has known Vasseur since they founded the French racing team ART Grand Prix together in 2004. Todt said Vasseur’s biggest strength is his analytical skill. “He likes to give opportunity to young people and he’s someone who likes to give space to people to try to show their worth,” Todt said.

Hamilton, who knew Vasseur before the British driver became a household name, has said his Ferrari move “really wouldn’t have happened without” the Frenchman.

Vasseur debuted in the F1 paddock in 2016 when Renault, making its F1 comeback as a constructor, recruited him as team principal. However, he departed after just one season due to differences of opinion with senior management and joined Switzerland’s Sauber in the middle of a season in which the team finished in last place.

Ferrari also provides engines for other F1 teams, and in 2022, Sauber, powered by a Ferrari engine, climbed to sixth in the standings, making an impression on Elkann.

Leclerc credits Vasseur with getting to know “every single individual” at Ferrari and bringing a sense of perspective to the team. In bad moments, Vasseur, known for his calm demeanour, re-motivates everybody with the positives, he told a podcast interview last year.

Whether or not Ferrari beats McLaren and Red Bull to the title this season, Vasseur must move swiftly to his next great challenge: integrating Hamilton into the team and preparing Ferrari for F1’s 2026 regulatory overhaul.

The sport’s new rules means teams must start from scratch with all-new vehicles and the real test for Vasseur will be whether he can oversee the creation of a winning car in a new era.

“The minimum target this season should be second place in the constructors’ championship and get the team ready to win championships from 2026,” said Paolo Aversa, professor of strategy at King’s Business School in London.

“He needs to build a high performing technical team that allows Ferrari’s drivers to compete for the championship, and in this regard we still don’t know where he stands.”

With Ferrari narrowing the gap with the leader McLaren, Vasseur will be hoping to make further gains this weekend in Mexico.

“Everybody is waiting for Ferrari to win again,” Nicolas Todt said. “It’s going to be something very big for motorsport, for Ferrari, for Italy and of course for Fred if Ferrari wins under his leadership.”

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