Italy’s antitrust body closes Dior probe with pledges to fund fight against labour exploitation

Audio By Carbonatix

Enlarge

MILAN (Reuters) – Italy’s antitrust body has closed its investigation into whether LVMH-owned Dior and two of its units misled consumers with their statements about working conditions at its suppliers, saying the firm had made pledges though no wrongdoing was found.

Dior’s commitments include paying 2 million euros ($2.3 million) over five years to support initiatives, open also to other brands, aimed at helping victims of labour exploitation.

Dior also committed to making changes to its ethical and social responsibility statements and to adopt stricter procedures to select and monitor suppliers, the authority said on Wednesday.

Last year prosecutors in Milan uncovered workshops where underpaid workers, often immigrants who were in the country illegally, produced leather bags then sold to Dior and Armani for a tiny fraction of their retail price.

This led Italy’s antitrust investigation to open an investigation into whether the luxury brands had misled consumers.

Italy’s antitrust authority said it was focusing on the discrepancies between the reality uncovered by the judicial labour probes and the messages from brands to consumers in terms of craftsmanship and corporate social responsibility.

Last year prosecutors appointed commissioners to oversee Dior and Armani’s units that outsourced the handbag production to ensure they fix their supply chain problems. The special administration regime was lifted earlier this year.

Last week, an Italian court placed a unit of fashion brand Valentino under judicial administration for a year after uncovering worker abuse inside its supply chain, in the latest in a string of cases that have tainted the image of luxury brands. ($1 = 0.8834 euros)

(Reporting by Elisa Anzolin; Editing by Valentina Za and Elaine Hardcastle)