Italy watchdog investigates Armani, Dior after employee exploitation probes | Workers’ Rights News | USAEMALL.com

Antitrust authority carried out searches on Tuesday at the companies of the Armani and Dior groups.

Italy’s competition authority says it is investigating whether luxury brands Armani and Dior have misled consumers, following inquiries by prosecutors into worker exploitation at suppliers of the two groups.

“In both cases, the companies may have issued untrue statements about their ethics and social responsibility, in particular with regard to working conditions and compliance with the law by their suppliers,” the competition watchdog said on Wednesday.

It noted that the companies “emphasised craftsmanship and quality”.

“However, in order to make certain articles and clothing accessories the companies allegedly used supplies from workshops and factories employing workers who would receive inadequate wages,” it added.

“In addition, such workers would work hours in excess of the legal limits and in inadequate health and safety conditions, in contrast to the production excellence levels the companies pride themselves.”

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.

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.

Dior, which is controlled by French luxury giant LVMH , said it was cooperating with the Italian authorities and 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”, saying in a statement that its companies were fully committed to cooperating with the authorities and that it believed the allegations had no merit.

The antitrust authority carried out searches on Tuesday at the companies of the Armani and Dior groups targeted by its investigation, it 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.

Breaches of the consumer code in Italy incur fines ranging from 5,000 euros to 10 million euros.