Italy’s competition authority is investigating whether Armani and Dior have misled consumers by issuing “untrue” statements about their ethics and social responsibility relating to working conditions at supplier factories.

Workers employed at Chinese-owned suppliers in the outskirts of Milan, including four suppliers of Dior and four subcontractors of two firms outsourced by Armani, allegedly received inadequate wages and worked excessive hours in poor safety conditions. Often these workers were undocumented migrants, including workers from China and Pakistan.

Several of these suppliers are under investigation, and commissioners have been appointed to oversee subsidiary units of Dior and Armani that outsourced handbag production to the suppliers. Similar actions have also been taken against Alviero Martini earlier in 2024, which Reuters says was placed under judicial administration for failing to oversee its suppliers. The Financial Times reports Alviero Martini said its suppliers had violated the terms of their contracts by subcontracting.

The bags were sold to both companies at a very small fraction of their retail price. For example, the Financial Times reported the supplier would sell a bag to Dior for EUR 53, and the same finished bag would then be sold for EUR 2,000.

In response to Al Jazeera, Dior said it is cooperating with authorities and would strengthen checks on suppliers. It said it would make no new orders with the suppliers. Armani said it was committed to cooperating to authorities and said it believed the allegations had no merit.