"Italy watchdog investigates Armani, Dior after worker exploitation probes"

Italy’s competition authority says it is investigating whether luxury brands Armani and Dior have misled consumers, following inquiries by prosecutors into worker exploitation at suppliers of the two groups.

“In both cases, the companies may have issued untrue statements about their ethics and social responsibility…”…

Prosecutors in Milan uncovered workshops on the outskirts of Italy’s fashion capital this year where underpaid workers, often immigrants who were in the country illegally, produced leather bags then sold to Armani and Dior for a tiny fraction of their retail price.

They placed under investigation several Chinese-owned Italian suppliers of Dior and Armani, while appointing commissioners to oversee the units of the two groups that outsourced the handbag production to ensure they fix their supply chain problems.

Dior, which is controlled by French luxury giant LVMH , said it was cooperating with the Italian authorities and would strengthen its checks on suppliers.

“No new order will be made in the future with these suppliers,” it said…

Armani Group expressed confidence in a “positive result following the [antitrust] investigation”, saying in a statement that its companies were fully committed to cooperating with the authorities and that it believed the allegations had no merit.