Armani and Dior Facing Antitrust Probe Over Alleged Exploitative Labor

Following reports that Armani and Dior engaged in exploitative labor practices for the construction of its luxury handbags, Italy's antitrust regulator has opened a probe into its commercial practices.

As reported by CNN, Italy's Competition Authority accused the luxury fashion houses of potentially issuing "untrue statements about their ethics and social responsibility, in particular with regard to working conditions and compliance with the law by their suppliers." The probe is focused on various firms under the Armani Group and the LVMH-owned Dior Group. The authority has already begun inspecting the premises of the firms as of this week.

The Competition Authority said that the marketing of the two companies' products, specifically its premium handbags, violated the Consumer Code in Italy, which could result in fines of over $10 million. It is believed the companies may have misled consumers over the production processes of their products.

Per the statement from the authority, the two brands "emphasized craftsmanship and quality" despite utilizing production methods that employ "workers who would receive inadequate wages" and "inadequate health and safety conditions." The brands are known for releasing products that boast "levels of production excellence" that are directly contradicted by recent claims by prosecutors in Milan.

In responding to the probe, Dior said that it was informed that several suppliers involved in the production of their luxury goods were engaging in "illegal practices."

"The house of Dior firmly condemns these unworthy acts, which contradict its values and the code of conduct signed by these suppliers," the company said. "Despite regular audits, these two suppliers had evidently succeeded in hiding these practices." Armani denied the allegations and said that it will cooperate with authorities amid the investigation.

The probe comes weeks after prosecutors alleged that both of the companies utilized Chinese-owned workshops with exploitative labor practices in the construction of their handbags and leather goods. Dior allegedly paid one supplier just $57 to produce some of its handbags that retail for as much as $2,780. Armani bags cost $100, meanwhile, despite a recommended retail price of $1,950. Some of the migrant workers at these factories were paid as little as $2 an hour.