Italy Investigates Dior and Armani for Labor Exploitation

Global luxury brands Christian Dior and Armani are reportedly under investigation by Italian authorities for alleged worker exploitation. According to Italian news agency ANSA, the Italian Competition Authority (AGCM) is investigating allegations that workers employed by the companies' contractors are not receiving proper wages, are working excessive hours, and are facing unfavorable working conditions.

In a statement, the AGCM stated that the two companies' subcontractors' exploitation of workers to produce goods, while promoting craftsmanship and high quality, constitutes consumer deception. Consequently, they conducted a search and seizure operation at the companies' Italian business locations, working in collaboration with the financial police.

The Armani Group stated that it will fully cooperate with the authorities' investigation and believes the allegations are unfounded. They also expressed their confidence in a positive outcome following the investigation.
On October 10th, the Milan Court ordered a judicial administrator to oversee the bag manufacturing company affiliated with Christian Dior's Italian branch, a subsidiary of the French luxury conglomerate LVMH, for one year. Dior, one of LVMH's leading fashion brands, is accused of neglecting worker exploitation as its subcontractor employed illegal Chinese immigrants and operated a 24-hour factory. It was discovered that these bags, which cost approximately ₩80,000 (approximately $60) to produce, were being sold at Dior stores for ₩3,840,000 (approximately $2,890).

Armani is also being investigated for similar issues. Armani's subcontractor paid workers €2-3 (approximately $2-3) for 10 hours of work to manufacture bags, which were then sold to Armani's supplier for €93 (approximately $100). These bags were subsequently sold at Armani stores for €1,800 (approximately $1,900), as discovered.

Italian authorities plan to investigate not only the companies' potential breaches of labor laws but also any violations of consumer protection laws during the marketing and sales processes. Specifically, they view the companies' practice of promoting craftsmanship and superior quality while selling products manufactured using worker exploitation at exorbitant prices as a form of misinformation for consumers.

Financière Agache, the LVMH holding company headed by Frédéric Arnault, the fourth of Bernard Arnault's five children, holds a 96% stake in Christian Dior. Against this backdrop, the worker exploitation allegations against Dior and Armani have sparked further controversy.
Italian authorities intend to conduct a thorough investigation into the two companies' potential violations of labor and consumer protection laws. The findings of these investigations could significantly impact the companies' brand image, and regaining consumer trust will necessitate sincere self-reflection and improvement efforts.

This incident appears poised to serve as a reminder of the hidden issue of worker exploitation that often lurks behind the high-priced products sold by luxury brands. Consumers are increasingly aware of and concerned about whether ethical standards are maintained during the production process, in addition to product quality.
To address these consumer demands, luxury brands must prioritize protecting workers' rights and ensuring fair treatment during product production. This is not merely a matter of avoiding legal ramifications but also a crucial element for sustainable brand growth.

It will be crucial to observe the actions taken by Dior, Armani, and other luxury brands in the future, as well as the conclusions reached by the Italian authorities' investigation. To prevent similar incidents from recurring, businesses must strengthen their commitment to transparent management and ethical production practices.

※ This article is a streamlined and reorganized version of the content from the Italian news agency ANSA.