The Italian competition authority is investigating whether Armani and Dior misled consumers about their production processes, following reports that local companies in their supply chains are underpaying workers and forcing them to work long hours.
In a statement Wednesday, the authority said Armani and Dior “may have made false statements about their ethics and social responsibility, in particular with regard to working conditions and legal compliance by their suppliers.”
The investigation focuses on a number of companies within the Armani Group and a number of companies within the Dior Group, owned by LVMH, the authority said. Inspections were also carried out at these companies on Tuesday.
The companies are being investigated for possible “unlawful” conduct in the marketing and sale of clothing and accessories, in violation of Italy’s consumer law, it noted. Violations of the code could result in fines of up to €10 million ($10.9 million).
Many mainstream fashion brands have long faced accusations of exploitative working conditions in their supply chains. But more control of luxury brands stands out because it challenges the perception that garments are produced ethically, through high prices, European suppliers and superior craftsmanship.
Italy’s competition authority said Armani and Dior “emphasized craftsmanship and quality” while using supplies from factories “that employed workers who would receive inadequate wages.” In some cases, workers were also forced to work long hours in “inadequate health and safety conditions.”
These practices contrast with the two groups’ “vaunted levels of manufacturing excellence,” the report noted.
The investigation follows allegations by prosecutors in Milan against several Chinese companies in Italy, which produce luxury goods for Dior and Armani, of systematic abuse of their workers, Reuters reports.
In a statement shared with CNN, Dior said Italian authorities recently informed the company about “illegal practices” at two of its suppliers involved in the production of men’s leather goods.
“The House of Dior strongly condemns these unworthy acts, which are contrary to its values and the code of conduct signed by these suppliers… Despite regular audits, these two suppliers apparently managed to conceal these practices,” the company added, noting that it would not place any new orders with the companies involved and was cooperating with Italian authorities.
Armani has denied the antitrust authority’s allegations but said it was cooperating with the latest investigation. “The companies involved are fully committed to (cooperating) with the authorities (but) believe the allegations are without merit and are confident of a positive outcome following the investigation,” the group told CNN in a statement.
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