The luxury industry’s supply chain practices have increasingly come under the microscope from both consumers and investors. Credit: Moustache Girl/Shutterstock.

Italy’s competition authority, the AGCM [Autorità Garante della Concorrenza e del Mercato] has initiated investigations into luxury fashion groups Armani and Dior following allegations of worker exploitation in their supply chains.  

The investigations were launched after probing activities by the Public Prosecutor’s Office and the Court of Milan, which received significant press coverage.  

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In April and June 2024, Milan prosecutors took action against a number of Chinese-owned firms in Italy that produce luxury goods for Dior and Armani, placing them in administration for alleged systematic employee abuse, according to reports via Reuters.  

The authority is examining claims that the companies may have used suppliers that employ workers under inadequate conditions, including low wages and excessive working hours.  

“The companies (Armani and Dior) may also have made false claims about their ethics and social responsibility, particularly concerning working conditions and legal compliance by their suppliers”, according to the antitrust agency.  

Neither Armani nor LVMH, Dior’s parent company, has so far commented.

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AGCM officials and the Special Antitrust Unit of the Italian Financial Police carried out inspections at the premises of the two companies on 16 July 2024, according to the AGCM press release. 

Violations of the consumer code can result in fines ranging from €5,000 ($5,456) to €10m.

The luxury industry’s supply chain practices have increasingly come under scrutiny from both consumers and investors.  

In February 2024, the competition watchdog imposed €7m ($7.5m) fines on British American Tobacco (BAT) and Amazon for misleading advertising practices. 

In 2023, the AGCM also imposed a €1.1m fine on companies owned by fashion influencer Chiara Ferragni for misleading charity claims associated with a branded Christmas cake.