Dior agrees remedies to close Italian antitrust body's investigation

Milan: LVMH-owned Dior has agreed a number of remedies to settle an Italian competition authority investigation into whether the luxury brand and two of its units misled consumers with their statements about working conditions at its suppliers.

The antitrust body said on Wednesday that the pledges made by Dior were an appropriate remedy for the possible unlawfulness and decided to close the investigation "without establishing any infringement".

Dior's commitments include paying 2 million euros ($2.3 million) over five years to support initiatives aimed at helping victims of labour exploitation.

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, 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.

Among the remedies, 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.

"Dior partnered closely with the Authority to define a robust set of commitments that increase transparency and strengthen oversight throughout its supply chain", the company said in a separate statement.

Italian consumer group Codacons said the investigation's outcome was too lenient, given the small size of the financial commitments and the fact that no fine was handed down.

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.