Italian Antitrust Investigation Into Armani, Dior Over Alleged Labor Exploitation, ET LegalWorld

Italy’s competition authority said on Wednesday it had opened an investigation into clothing giants Armani and Dior over alleged exploitation of workers in their supply chain.

In June and April, prosecutors in Milan ordered the administration of several Chinese companies in Italy that produce luxury goods for Dior and Armani, accusing them of systematically abusing workers.

The regulator accused Armani and Dior of “insisting on craftsmanship and excellence in workmanship”, while citing workshops employing people who were underpaid, worked long hours and breached health and safety regulations.

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

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“The companies (Armani and Dior) may have made false statements regarding ethics and social responsibility, in particular with regard to working conditions and compliance with the law by their suppliers,” the antitrust authority said.

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

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

Violation of the Consumer Code is punishable by fines ranging from 5,000 euros ($5,456) to 10 million euros ($10.91 million).

The luxury industry’s supply chain has come under increasing scrutiny from consumers and investors in recent years. To mitigate reputational risk, fashion brands have cut subcontractors and moved production in-house.

Italy’s antitrust agency also deals with consumer rights and unfair trade practices. Last year, it fined fashion influencer Chiara Ferragni’s companies almost €1.1 million for misleading charitable claims about Ferragni’s Christmas cake.

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