Dior and Armani Respond to Italian Competition Authority Probe Into Supply Chain
- Dior and Armani are under investigation in Italy for possible misleading consumers about their ethics and social responsibility, particularly regarding working conditions and compliance with the law by their suppliers.
PARIS— Dior on Wednesday sought to quell the growing public relations crisis over an Italian investigation into illegal practices at some of its suppliers, saying it has suspended orders with the manufacturers in question and disputing some of the information that has been widely circulated in the media and sparked outrage on social media.
Following news last month of a probe into allegations of worker exploitation at several Chinese-owned firms in Italy producing luxury goods, the country's competition authority said on Wednesday it has launched investigation proceedings into several companies belonging to the Dior Group and the Armani Group for possibly misleading consumers.
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"In both cases, the companies may have issued untrue statements about their ethics and social responsibility, in particular with regard to working conditions and compliance with the law by their suppliers," it said in a statement.
"Moreover, the companies emphasized craftsmanship and quality. However, in order to make certain articles and clothing accessories the companies allegedly used supplies from workshops and factories employing workers who would receive inadequate wages," the competition authority continued.
It added that employees also worked excessive hours in inadequate health and safety conditions.
"The Armani Group acknowledges the opening of an investigation for alleged unfair commercial practices related to our institutional communication in the field of corporate social responsibility. The companies involved are fully committed to cooperate with the authorities, believe that the allegations have no merit and are confident of a positive result following the investigation," Armani said.
In a separate, more detailed, statement, Dior said it was collaborating with Italian authorities after being notified of the discovery of illegal practices at two of its suppliers in charge of partial assembly of its leather goods for men.
"The house of Dior firmly condemns these unworthy acts, which contradict its values and the code of conduct signed by these suppliers. They do not reflect the reality of the work of its artisans and the long-lasting links which exist with Italy," it said.
"No new order will be made in the future with these suppliers. The Dior teams are working intensely on ongoing reinforcements of the existing procedures. Despite regular audits, these two suppliers had evidently succeeded in hiding these practices," Dior added.
Dior's reputation has been tarnished by reports last month that some of its products were made in sweatshop-like conditions and that some of its bags cost just 53 euros to assemble, while retailing in the region of 2,600 euros.
The French luxury house disputed the information.
"Certain articles mention entirely false facts, firstly in indicating that the suppliers in question produced women's handbags when they were solely participating in the partial assembly of men's leather goods ; and secondly that the production costs of these bags are ridiculously low. It should be noted that the profit margin of the house of Dior is entirely in line with that of the luxury industry and nothing of the order indicated by these erroneous comments," it said.
"Dior will follow the evolution of its artisanal products — notably the integration of production into its own ateliers — and will continue to offer the best working conditions to all who contribute, with immense commitment and remarkable know how, to create the finest quality Dior products," it added.
The house noted that it has worked with the largest Italian suppliers for more than 30 years, contributing to the creation of 4,000 jobs.
Several investigations over the years have highlighted squalid working conditions at the thousands of workshops run by Chinese immigrants, mainly in Prato, the historical capital of Italy's textile business. But the advent of social media, coupled with growing investor focus on environmental, social and governance criteria, has made the issue more pressing for luxury brands.
— With contributions from Luisa Zargani
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