By Alvise Almellini and Alessandro Parodi
ROME (Reuters) – Italy’s competition authority said on Wednesday it was investigating whether luxury brands Armani and Dior had misled consumers, following reports by prosecutors of labor exploitation investigations into some of the brands’ suppliers.
In recent months, Milan prosecutors have ordered the judicial management of several Italian Chinese companies that make luxury goods for Dior and Armani, alleging systematic mistreatment of workers.
Authorities alleged that while Armani and Dior “emphasized craftsmanship and superior finishes” of their products, they relied on factories that employed workers who were underpaid, worked long hours and violated health and safety regulations.
In a statement, authorities said the investigation was focusing on some companies within the Armani Group and LVMH’s Dior Group, and that inspections of the companies were carried out on Tuesday.
“Both (Armani and Dior) companies may have falsely claimed ethical and social responsibility, particularly with regard to their suppliers’ working conditions and compliance with laws and regulations,” the antitrust agency said.
The paper said they were being investigated for “suspected illegal practices in the advertising and sale of goods and clothing in breach of (Italian) consumer law.”
In a statement, Armani Group expressed confidence in a “positive outcome following the investigation” and said its companies would “fully cooperate” with authorities, adding that it believed the “allegations are without basis.”
LVMH did not immediately respond to a request for comment.
Violating Italian consumer law carries fines ranging from 5,000 euros ($5,456) to 10 million euros ($11 million).
Luxury industry supply chains have come under increasing scrutiny from consumers and investors in recent years, and fashion brands are cutting the number of subcontractors and moving more production in-house to reduce the risk to their reputations.
Italy’s antitrust authorities also monitor consumer rights and unfair trade practices: Last year, they fined a company owned by fashion influencer Chiara Ferragni about 1.1 million euros for making misleading charity claims on Ferragni-branded Christmas cakes.
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