Italy watchdog probes Armani, Dior over supplier labour issues

Rome: Italy's competition watchdog said Wednesday that it was investigating luxury fashion groups Armani and Dior over allegations they used suppliers that underpaid and overworked their staff.

As part of the probe, the AGCM watchdog and the Guardia di Finanza financial police on Tuesday carried out inspections at the headquarters of Giorgio Armani SpA and G.A. Operations SpA as well as Christian Dior Italia Srl, the watchdog said.

The investigation comes after units of Armani and Dior were separately placed under judicial administration earlier this year following concerns over labour law violations by subcontractors.

In a statement, the competition watchdog said it had opened an investigation into the Armani and Dior group companies for alleged unfair commercial practices.

"In some cases the companies may have used supplies from workshops employing workers who would receive inadequate wages," it said.

The staff are also alleged to have worked "hours in excess of the legal limits and in inadequate health and safety conditions".

The watchdog is also looking into possible violations of the consumer code in the way the companies promoted and sold clothes and accessories.

"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," it said.

It noted that the companies - which sell handbags costing thousands of euros - "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."

In a statement, the Armani group said its companies were "fully committed to co-operate with the authorities", adding they believed the allegations "have no merit".

Dior did not respond to a request for comment.

'Chinese factories'

In April, an Italian court placed a unit of Armani under partial judicial administration for one year, after it found one of its suppliers used subcontractors that violated labour laws.

Giorgio Armani Operations - a company wholly owned by Giorgio Armani, which deals with the design and production of the label's clothes and accessories - was not itself accused of wrongdoing.

But the court said one of its suppliers subcontracted production in the Milan area to what it called "Chinese workshops" mainly employing Chinese and Pakistan nationals in exploitative conditions.

Armani said at the time that it was fully cooperating with authorities and had "always had control and prevention measures in place to minimise abuses in the supply chain".

In June, a Milan court ordered that another top fashion company be placed under judicial administration, for what police said was a failure to prevent labour exploitation within its supply chain.

The company was widely reported to be Manufactures Dior Srl, a unit of Christian Dior Italia. Dior is owned by the French giant LVMH.

According to a police statement at the time, the firm outsourced production of part of its 2024 collection of bags and accessories to third-party companies.

An investigation identified suppliers described as "Chinese factories, which managed to reduce costs by resorting to the use of irregular and illegal workers in exploitative conditions".

Four such factories were checked, "all of them irregular", police said. They employed 32 people, including seven who did not have the correct documents and two who were in Italy illegally.

Their pay was poor for long hours of work, with workers also housed in illegally built and insanitary dormitories, police said.