Italy's Competition Authority Closes Dior Probe
Italy's Competition Authority has closed an investigation into whether Dior and two of its subsidiaries misled consumers about working conditions at its suppliers.
The consumer watchdog said Wednesday that it decided to close the probe 'without establishing any infringement' after Dior made a number of binding commitments designed to address any possible false statements in ethics and social responsibility statements.
Among other things, Dior has agreed to contribute €2 million ($2.3 million) over the next five years to help identify and support victims of labour exploitation. The company will also update its ethics and social responsibility statements, strengthen its processes for vetting and monitoring suppliers and provide employees in marketing and communication functions with training on consumer protection laws, the Competition Authority said.
Dior said it welcomed the conclusion of the investigation, adding that it had worked closely with the Authority to define 'a robust set of commitments that increase
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transparency and strengthen oversight.'
The Competition Authority's investigation was opened last July, after prosecutors in Milan linked Dior's supply chain to sweatshops on the outskirts of the city. It launched a probe into Armani, which had also been accused of outsourcing to illegal factories, at the same time. There has been no update on the status of the probe into the Italian brand. The Competition Authority declined to comment on the matter. Armani did not respond to a request for comment.
The industry seemed to be putting the scandal behind it earlier this year, after both Dior and Armani were released early from court-appointed supervision put in place to address alleged shortcomings in their supply chain oversight. But last week, Valentino was also placed under judicial administration for failing to identify instances of exploitation at its suppliers.
Despite the high-profile cases that have come out in the last year, Valentino kept working with suppliers who exploited workers 'without in any way increasing its control systems,' Milan judges wrote in their ruling. Valentino said it has been intensifying its processes for supply chain oversight for several years and that it plans to cooperate with the authorities to understand what led to the measures against it.
The brands' efforts to address the issues have not satisfied everyone. Italian consumer group Codacons condemned the Competition Authority's decision to close its investigation into Dior without imposing a heftier, formal fine.
Learn more:
What Happened to Italy's Luxury Sweatshops Investigation?
It's been almost a year since Italian prosecutors linked Armani and then Dior to sweatshops on the outskirts of Milan as part of an investigation that was expected to put up to a dozen more fashion brands under the microscope. In response, officials and industry leaders have rushed to tighten controls over the luxury supply chain.
Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders' documentation guaranteeing BoF's complete editorial independence.
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