(Bloomberg) -- Italy’s Competition Authority opened an investigation into some companies controlled by luxury fashion groups Giorgio Armani SpA and LVMH’s Christian Dior over alleged unfair commercial practices.
The probe has prompted Dior to cut off orders from the targeted suppliers, the fashion house said in a statement after the investigation was made public Wednesday.
The Rome-based antitrust regulator is investigating whether the two brands used suppliers applying unfair commercial practices, including paying employees “inadequate” wages and sometimes forcing them to illegally work long hours in inadequate health and safety conditions.
The probe is only the latest move by authorities in Italy to crack down on alleged unlawful business conduct in the fashion industry.
In June, a Milan court put a unit of the French fashion house Dior under judicial control citing alleged labor violations in its supply chain. Dior, which produces luxury bags and accessories in Italy, didn’t “prevent and stem labor exploitation within its production cycle,” the Italian police said at the time.
Similarly, in April a Milan judge placed the manufacturing unit of Armani under the same control for alleged workers exploitation.
On Tuesday, financial police and antitrust officials searched the headquarters of Giorgio Armani SpA, G.A. Operations SpA and Christian Dior Italia, according to the statement.
Armani Group said it was aware of the investigation.
“The companies involved are fully committed to co-operate with the authorities, believe that the allegations have no merit and are confident of a positive result following the investigation,” the Italian company added in a written statement.
--With assistance from Tiago Ramos Alfaro.
(Updates with Dior comment)
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