MILAN (Reuters) - An Italian court on Friday announced the early end of a special administration regime placed on an Italian subsidiary of French luxury giant LVMH over allegations of labour exploitation in the manufacturing of Dior-branded handbags.
Manufactures Dior SRL, fully owned by Christian Dior (EPA:DIOR) Italia SRL, had been ordered into court administration in June 2024 for one year, after a probe alleged it had sub-contracted work to Chinese-owned firms that mistreated workers.
Over the past almost nine months, the company has adopted the required organisational model and supplier control procedures, the Milan court said in a statement.
"In detail, the fashion house resolved relationships with 'at-risk' suppliers extremely quickly and also developed several best practices that received court approval," the judges said.
With Friday's decision on Dior's unit, the Milan court has revoked ahead of time all three special administrations it had imposed last year on fashion brands, first on Alviero Martini and then on an Armani unit.
Dior welcomed the ruling and said it had "further strengthened its operations along the supply chain, setting a new benchmark for best practice in the industry".
"Dior firmly reaffirms its commitment to protecting and applying the core values of transparency, integrity and respect throughout the supply chain," the company said in a statement.
According to the June ruling, Manufactures Dior had outsourced the production of bags to four small suppliers, which employed 32 people. Two employees were illegal immigrants while another seven worked without the necessary documentation.
The staff's working and living conditions fell below the minimum required, the Milan court said at the time.
"The company showed a deep understanding of the rationale behind the measure, and saw this as an opportunity to strengthen and implement internal checks, aimed at avoiding a repetition of similar events," the court said on Friday.
Investigations by Italian magistrates, especially the Milan prosecutor's office, over the last year have uncovered alleged exploitation of workers in the fashion and luxury supply chain.
Milan's Court of Justice proposed in June a nationwide scheme for luxury companies to step up checks on suppliers to ensure they comply with labour laws.