The Italian Antitrust Authority announced it has initiated investigations into the Armani and Dior groups over allegations of worker exploitation by their suppliers.
The competition watchdog suspects these companies of “possible unlawful conduct in the promotion and sale of clothing items and accessories,” potentially violating the Consumer Code.
According to the authority, both companies may have made false statements regarding their ethical standards and social responsibility, particularly concerning the working conditions and legal compliance of their suppliers.
Despite promoting their craftsmanship and quality, it is alleged the companies sourced certain clothing items and accessories from workshops and factories where workers received inadequate wages.
Prosecutors in Milan uncovered workshops on the outskirts of Italy’s fashion capital this year where underpaid workers, often immigrants who were in the country illegally, produced leather bags then sold to Armani and Dior for a tiny fraction of their retail price.
Furthermore, these workers reportedly worked hours exceeding legal limits and in substandard health and safety conditions, contrary to the high production standards the companies claim to uphold.
They placed under investigation several Chinese-owned Italian suppliers of Dior and Armani, while appointing commissioners to oversee the units of the two groups that outsourced the handbag production to ensure they fix their supply chain problems.
Armani and Dior cooperating with authorities
Dior, which is controlled by French luxury giant LVMH, said it was cooperating with the Italian authorities. It also said it would strengthen its checks on suppliers. “No new order will be made in the future with these suppliers,” it said. “Despite regular audits, these two suppliers had evidently succeeded in hiding these practices,” it added.
Armani Group expressed confidence in a “positive result following the (antitrust) investigation.” In a statement it said its companies were fully committed to cooperating with the authorities. Furthermore, it believed the allegations had no merit.
