LVMH Italian fashion house Loro Piana put under court administration
A source inside Loro Piana, which is known for its cashmere, confirmed to AFP the proceedings against it, but the company did not provide any official comment.
The police said the company had been deemed "incapable of preventing or curbing labour exploitation within the production cycle by failing to implement adequate measures to verify the actual working conditions or the technical capacities of its contractors".
An investigation found the fashion house entrusted the production of its clothing, including cashmere jackets, to a company without production facilities.
That firm outsourced the work to another company, which in turn used workshops employing Chinese workers to save costs.
In these workshops, irregular workers were exploited without respecting health and safety rules, particularly regarding wages, working hours, breaks and holidays, investigators found.
The judges of the Milan court found that Loro Piana "negligently facilitated" the exploitation, according to the police statement.
The investigation began in May following a complaint from a Chinese worker who claimed he was beaten by his boss after demanding payment of back wages.
The police carried out inspections in factories run by Chinese citizens in the area surrounding Milan, finding violations of workplace rules as well as illegally built dormitories and unsanitary conditions.
Proceedings were brought against two Chinese nationals who owned workshops, two Italians for violations of workplace health and safety standards, and seven workers without residence permits.
The court also imposed fines totalling over 181,000 euros ($211,000) and administrative penalties of around 60,000 euros.
The operations of two Chinese workshops were also suspended "for serious safety violations and the use of undeclared labour", the police statement said.
Loro Piana was acquired by LVMH in 2013, and is currently led by Frederic Arnault, son of LVMH chairman Bernard Arnault.
The company did not comment on the proceedings in Milan.
The Italian justice system has already carried out similar proceedings against other fashion houses including Armani.
In May, the Italian competition authority cleared luxury brand Dior -- also owned by LVMH -- of violations in working conditions but required it to pay a two-million-euro fine towards "victims of exploitation".
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