In brief
The Italian Competition Authority (AGCM) has opened two investigations (PS12793 and PS12805) against two major luxury groups for alleged conduct in violation of Consumer Code rules in the promotion and sale of clothing items and accessories.
In depth
According to the AGCM, in both cases, the companies may have made, in promoting their products, untrue ethical and social responsibility statements, particularly regarding working conditions and compliance with legal requirements at their suppliers.
As mentioned in the press release (available here in Italian and here in English) in some cases the companies would use supplies from laboratories employing workers who would receive inadequate wages. They would also operate at working hours beyond legal limits and under insufficient health and safety conditions.
Should the AGCM’s theory of harm be confirmed, the boasted levels of production excellence would conflict with the conditions of workers employed in the production process, thus resulting in an unfair commercial practice.
The AGCM’s action aims at sanctioning the use of untrue claims about product qualities in order to gain prestige in the consumers’ eyes by leveraging ethical, environmental, social sustainability, and respect for a product’s origin.
In addition, the AGCM’s enforcement now also focus on relationships with suppliers and sub-suppliers that are often, especially in the luxury sector, small businesses and artisans.
Indeed, the proper management of such suppliers – in many cases also economically dependent on the principal brand – now becomes even more a priority for companies, not only in the genetic phase of the relationship (through the preparation of balanced contracts) but also in the executive phase of the same (which requires the adoption of protocols for verifying the wages and health and safety conditions in which the sub-supplier/contractor’s workers are employed).
Within such a context, a careful preventive compliance is key not only to avoid the risk of significant fines by the AGCM (maximum fine of 10 million euros) but also proceedings, of a criminal nature, with a considerable media impact and consequent reputational damage.
