Italy antitrust probes Armani, Dior over alleged exploitation of workers

6:55 am Wednesday, July 17th, 2024

By Alvise Armellini and Alessandro Parodi

ROME (Reuters) – Italy’s competition authority said on Wednesday it had begun an investigation into luxury fashion groups Armani and Dior over the alleged exploitation of workers in their supply chain.

In June and April, Milan prosecutors ordered that several Chinese-owned firms in Italy – producing luxury goods for Dior and Armani – be placed under administration, accusing them of systematically abusing their employees.

The regulator alleged that Armani and Dior “emphasised the craftmanship and the excellence of their workmanship” while relying on workshops employing people on inadequate salaries, working long hours and in violation of health and safety rules.

The probe focused on some companies of the Armani Group and the LVMH-controlled Dior Group, and inspections were carried out at the companies on Tuesday, the agency said.

“The (Armani and Dior) companies may have made untrue ethical and social responsibility claims, in particular with regard to working conditions and compliance with legality at their suppliers,” the antitrust agency said.

They were placed under investigation “for possible unlawful conduct in the promotion and sale of articles and clothing accessories, in breach of the (Italian) Consumer Code,” it said.

Armani and LVMH did not immediately respond to requests for comment.

Breaches of the consumer code are punishable with fines ranging from 5,000 euros ($5,456) to 10 million euros ($10.91 million).

The luxury industry’s supply chain has come under increased scrutiny by consumers and investors in recent years. To reduce risks to their reputation, fashion labels have curbed the number of sub-contractors and brought production in-house.

Italy’s antitrust agency also polices consumer rights and unfair commercial practices. Last year, it fined companies owned by fashion influencer Chiara Ferragni almost 1.1 million euros over misleading charity claims on a Ferragni-branded Christmas cake.

($1 = 0.9166 euros)

(Additional reporting by Elisa Anzolin, editing by Miral Fahmy and Bernadette Baum)