Dior settles labour abuse investigation in Italy with €2 million commitment

Luxury fashion house Dior, owned by LVMH, has agreed to a set of remedies to resolve an investigation by Italy’s competition authority into whether the brand and two of its subsidiaries misled consumers regarding labour conditions at its suppliers.

On May 21, the Italian antitrust agency announced it had closed the investigation without establishing any infringement, citing Dior’s proposed commitments as a suitable resolution to concerns over potential wrongdoing, Caliber.Az reports via foreign media.

“The pledges made by Dior were an appropriate remedy for the possible unlawfulness,” the authority stated.

As part of the settlement, Dior will contribute €2 million (approximately $2.3 million) over five years to fund initiatives aimed at supporting victims of labour exploitation, the antitrust body confirmed.

The investigation followed findings made last year by Milan prosecutors, who uncovered workshops where underpaid workers, many of them undocumented immigrants, were making leather bags that were then sold to luxury brands like Dior and Armani for a tiny fraction of their retail price.

This prompted Italy's competition authority to open a probe into whether consumers had been misled by brand narratives emphasising craftsmanship and corporate social responsibility, particularly given the contrast with the labour conditions revealed by the judicial investigations.

As part of its commitments, Dior has agreed to revise its ethical and corporate social responsibility statements and to implement more stringent procedures for supplier selection and monitoring, the authority added.

In a separate statement, Dior emphasised its cooperation with Italian regulators:

“Dior partnered closely with the Authority to define a robust set of commitments that increase transparency and strengthen oversight throughout its supply chain,” the company said.

However, the settlement drew criticism from Codacons, an Italian consumer advocacy group, which argued that the outcome was too lenient.

“The financial commitments are minimal and no fine was issued,” Codacons stated, expressing disappointment over the lack of stronger punitive action.

In 2023, in response to the labour violations, Italian prosecutors appointed commissioners to oversee the units of both Dior and Armani responsible for outsourcing the production of handbags, in an effort to remedy supply chain abuses. That special administration regime was lifted earlier this year after improvements were made.

Meanwhile, similar issues persist in the fashion industry. Just last week, an Italian court placed a unit of the Valentino fashion house under judicial administration for one year, after uncovering abuse of workers within its supply chain.

By Tamilla Hasanova