The encyclopedia · Legal & Compliance · Legal decision · 2025
Dior's Italian unit put under court administration over sweatshop handbag suppliers
A Milan court put LVMH's Dior unit under judicial administration over exploited handbag suppliers; the antitrust body then settled with a €2M pledge
Dior · LVMH · Manufactures Dior · 2025-05
What happened
Dior, owned by LVMH, markets itself on French couture and 'Made in Italy' craftsmanship. In June 2024 the Milan Court imposed judicial administration on Manufactures Dior, the group's Italian subsidiary, over alleged labour exploitation in the production of Dior handbags. Investigators linked the brand to sweatshops on the outskirts of Milan, where undocumented workers produced bags for outsourced suppliers.
The court appointed commissioners to oversee the unit responsible for outsourcing handbag production, the same measure imposed on an Armani unit. In February 2025 the Milan Court lifted the judicial administration early, after Dior took corrective and preventive measures and regained full control of the Italian operation.
The regulatory pressure continued. In May 2025 Italy's antitrust authority, the AGCM, closed its probe (case PS12805) into whether Dior had misled consumers about working conditions. The authority made binding Dior's commitments to pay €2 million over five years to combat worker exploitation and to strengthen supply-chain monitoring, accepting that the brand's ethical claims had outrun the reality of its subcontractor network.
Why it happened
- Dior outsourced handbag production to subcontractors that exploited undocumented workers, while marketing the result on craftsmanship and ethical claims
- The brand's promises about working conditions did not match the reality of its supply chain, giving the antitrust body a misleading-consumer case
- Court supervision and a binding €2M commitment were the price of sourcing decisions made far from the Milan ateliers the brand's story was built on
- Subcontracting without robust oversight turned a cost-saving choice into a regulatory and reputational liability
The lesson
Marketing 'Made in Italy' craftsmanship while subcontractors exploit workers makes a sourcing shortcut a regulatory and reputational bill — the brand promise becomes the evidence against you
Aftermath
The Milan Court imposed judicial administration on Manufactures Dior in June 2024 over alleged labour exploitation in handbag production, then lifted it early in February 2025 after Dior took corrective measures. In May 2025 the AGCM closed its misleading-claims probe, making binding a €2 million over-five-years commitment to combat worker exploitation and strengthen supply-chain monitoring. The case was part of a wider Italian investigation that implicated dozens of luxury brands and put pressure on the 'Made in Italy' label.
Sources
- WWD — Milan Court Lifts Judicial Administration on Dior Over Labor Practices
- AGCM — The Italian Competition Authority secures €2 million over 5 years (case PS12805)
- Business of Fashion — Italian Court Lifts Supervision of Dior Unit Over Labour Exploitation
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