Italy antitrust targets Armani, Dior after worker exploitation probes
Antitrust probe follows judicial inquiries
Social responsibility claims may be untrue, says antitrust body
Consumers possibly misled also over craftsmanship
Adds examples of marketing messages from Armani and Dior, Dior comment in paragraphs 5-6
By Alvise Armellini and Alessandro Parodi
ROME, July 17 (Reuters) -Italy's competition authority is investigating whether luxury brands Armani and Dior DIOR.PA had misled consumers, it said on Wednesday, following inquiries by prosecutors into worker exploitation at suppliers of the two groups.
Prosecutors in Milan uncovered workshops on the outskirts of Italy's fashion capital this year where underpaid workers, often immigrants who were in the country illegally, produced leather bags then sold to Armani and Dior for a tiny fraction of their retail price.
They placed under investigation several Chinese-owned Italian suppliers of Dior and Armani, while appointing commissioners to oversee the units of the two groups that outsourced the handbag production to ensure they fix their supply chain problems.
Dior, which is controlled by French luxury giant LVMH LVMH.PA, said it was cooperating with the Italian authorities and would strengthen its checks on suppliers.
"No new order will be made in the future with these suppliers," it said.
"Despite regular audits, these two suppliers had
evidently succeeded in hiding these practices," it added.
Armani Group expressed confidence in a "positive result following the (antitrust) investigation", saying in a statement that its companies were fully committed to cooperating with the authorities and that it believed the allegations had no merit.
The antitrust authority carried out searches on Tuesday at the companies of the Armani and Dior groups targeted by its investigation, it said.
They were placed under investigation "for possible unlawful conduct in the promotion and sale of articles and clothing accessories, in breach of the (Italian) Consumer Code," it said.
Breaches of the consumer code in Italy incur fines ranging from 5,000 euros to 10 million euros
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