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Dior has agreed to pay €2mn to fund programmes to identify victims of labour exploitation as part of a settlement with Italy’s competition watchdog, after a probe into unfair practices at some of the luxury group’s subcontractors.
Italy’s Authority for the Guarantee of Competition and the Market said on Wednesday it had closed an investigation into Dior “without establishing any infringement” after the company agreed to remedies, including funding an initiative to identify and support victims of labour exploitation.
The watchdog had launched an investigation into Dior and Armani last year over unfair commercial practices connected to the alleged exploitation in their Italian supply chains. The probe into Armani is still ongoing.
The watchdog said LVMH-owned Dior agreed to amend its ethics and social responsibility statements and implement new protocols to vet and monitor suppliers, who would also receive training in labour law and ethics. It would also train marketing and communications employees on consumer protection laws.
“Dior partnered closely with the Authority to define a robust set of commitments . . .[and] remains committed to upholding our values of transparency and respect throughout our supply chain,” the company said.
“We continue to closely monitor, and where appropriate, strengthen, our internal procedures,” it added.
The AGCM probe came on the heels of two Milan court rulings that led to the appointment of special administrators to supervise the implementation of fixes to labour exploitation issues at the outsourced handbag suppliers to Armani and Dior. The measures were lifted in February.
Italian authorities had found that two wholly owned subsidiaries of Dior and Armani had used Chinese-owned subcontractors in Italy that appeared to be mistreating their employees, many of them workers from China living in squalid conditions without immigration papers.
Dior and Armani said at the time that they would co-operate with the competition probe.
Allegations of labour exploitation within the supply chains of top luxury houses could threaten the image of brands that emphasise craftsmanship and artisanal production to justify their high prices.
Luxury brands have also been keen to highlight that their products are inherently sustainable and ethical because of their craftsmanship, in contrast with some fast-fashion brands.
The probes came amid a downturn in global demand for luxury goods after a period of rapid growth in part fuelled by sharp price increases. Dior is luxury leader LVMH’s second-largest brand by sales, after Louis Vuitton.
