Italian authorities are deepening their crackdown on labor abuses in the luxury fashion industry, signaling a new phase of regulatory scrutiny that directly challenges the heritage and craftsmanship-centric narratives that luxury brands rely on. Some of the latest developments include the closure of Italy’s consumer protection investigation into Dior, the early termination of judicial administration over a Valentino unit, and most recently, a broader investigation that saw authorities seek governance and supply-chain documents from nine luxury companies – from Chanel and Goyard to Bulgari, Moncler, and Brunello Cucinelli – in connection with their product packaging.
From Dior to Chanel: Italy Expands Luxury Supply Chain Crackdown
Italian authorities have continued to broaden their scrutiny of labor practices in the luxury supply chain, with the latest phase extending beyond individual workshops and manufacturers to the oversight systems employed by some of the industry’s biggest brands. Most recently, police visited the offices of nine luxury companies – including Chanel, Goyard, Bulgari, Moncler, Brunello Cucinelli, Etro, Stefano Ricci, Jacob Cohën, and Owenscorp Italia – seeking documents relating to governance and supply-chain controls after investigators traced packaging materials bearing the brands’ labels to Chinese-owned subcontractors accused of exploiting workers.
Notably, none of the companies has been accused of wrongdoing, and prosecutors have not sought court-appointed administration for any of them. Instead, authorities are examining the companies’ supply-chain oversight as part of the broader investigation into alleged labor exploitation involving subcontractors.
The latest development builds on a series of high-profile enforcement actions. Earlier this year, police in Milan arrested a Chinese national and shuttered a clandestine workshop on the city’s outskirts that produced clothing for unnamed fashion brands. The site was found to employ 10 Chinese workers, six of whom were unregistered and five of whom were living in Italy without legal status. According to authorities, the workers endured extreme conditions, laboring up to 90 hours per week for as little as €4 an hour while sleeping in makeshift, unhygienic dormitories inside the workshop.
The investigation was triggered by a worker’s complaint after his hand was allegedly broken by an employer when he attempted to recover €10,000 in unpaid wages. It followed closely from a separate case involving Valentino. In May 2025, an Italian court placed Valentino Bags Lab under judicial administration after finding that it had subcontracted production to Chinese-owned firms that exploited workers. The court, however, lifted the measure early in April 2026 after Valentino strengthened its governance safeguards, introduced a more rigorous supplier qualification process, and enhanced its systems for monitoring and controlling its supply chain. The matter mirrored earlier judicial administration orders involving units of Armani and Dior after Milan prosecutors uncovered exploitative subcontracting networks in the production of luxury leather goods.
Separately, Italy’s Competition Authority (“AGCM“) closed its consumer protection investigation into a Dior-owned company after the brand agreed to a package of voluntary commitments stemming from judicial findings that exposed sweatshop-like conditions in subcontracted workshops producing luxury handbags. The investigation centered on whether Dior’s public representations regarding ethics, craftsmanship, and its supply chain could mislead consumers in light of the labor conditions uncovered within portions of its manufacturing network. Without establishing any infringement of consumer protection law, the AGCM accepted Dior’s commitments and closed the matter.
Under the settlement, Dior agreed to strengthen its supplier selection and auditing procedures, enhance oversight throughout its supply chain, and contribute €2 million over five years to initiatives aimed at identifying and supporting victims of labor exploitation.
“Dior remains committed to upholding our values of transparency and respect throughout our supply chain,” the company said in a statement. “We continue to closely monitor, and where appropriate, strengthen, our internal procedures to maintain fair and equitable working conditions for everyone who contributes, with great commitment and skill, to creating the finest quality Dior products.”
What began with investigations into individual workshops and judicial administration orders involving certain luxury companies has evolved into broader scrutiny of the governance structures, supplier qualification procedures, auditing practices, and supply-chain controls luxury brands use to oversee their manufacturing networks. For luxury brands, the legal focus is no longer confined to the conditions uncovered inside a factory – it extends to the systems designed to prevent those conditions from arising in the first place.
A Broader Legal Reckoning
These developments are not isolated. Over the past several years Italian magistrates have exposed widespread abuse in the fashion and luxury sectors, prompting legal and administrative reforms aimed at closing the gap between luxury’s crafted image and the exploitative practices that often sustain it. A 2024 proposal from Milan’s court urges fashion companies to adopt stricter oversight procedures to ensure labor law compliance among suppliers.
Italy is home to a dense network of small manufacturers – estimated to produce more than half of the world’s luxury goods, according to Bain & Company. While these workshops play a critical role in the industry’s global dominance, they also represent a vulnerability: a fragmented supply chain that allows major brands to outsource production with minimal visibility, creating fertile ground for labor abuses to flourish.
Regulators are asking not only what happened inside supplier facilities but also whether luxury brands had adequate systems in place to detect and prevent labor abuses. And they are not just focusing on labor violations themselves but also on the systems luxury companies use to prevent them. Supplier qualification procedures, auditing practices, governance structures, and ongoing oversight have become central features of Italy’s enforcement strategy, reflecting a broader expectation that brands exercise meaningful control over increasingly complex supply chains.
With authorities continuing to raid workshops, place luxury companies under judicial administration, resolve consumer protection investigations, and seek governance records from some of the industry’s biggest names, a clear pattern has emerged. Italy’s enforcement efforts have expanded beyond uncovering labor abuses themselves to scrutinizing whether luxury companies have implemented meaningful governance and oversight systems to prevent them.
As the industry grapples with its social responsibilities, Italy’s message is clear: luxury cannot come at the cost of the law.
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