Italy: Italian Competition Authority – Untrue moral boasting

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The Italian Competition Authority (AGCM) has opened two investigations (PS12793 and PS12805) against two major luxury goods groups, alleging violations of the Consumer Code in the promotion and sale of clothing and accessories.

According to the AGCM, in both cases, the companies may have False ethical and social responsibility statementsin particular with regard to working conditions and compliance with legal requirements of its suppliers.

As stated in the press release (in Italian and English), in some cases, these companies use supplies from laboratories that employ workers who are not paid enough. They also work hours that exceed legal limits and in inadequate health and safety conditions.

If the AGCM damage theory is confirmed, Have excellent production level It would conflict with the conditions of workers employed in the production process, leading to unfair business practices.

The AGCM’s actions aim to sanction the use of untrue product quality claims in order to gain prestige in the eyes of consumers by leveraging ethical, environmental, social sustainability and respect for the origin of the product.

In addition, AGCM enforcement now also focuses on relationships with suppliers and sub-suppliers, which are often small businesses and artisans, especially in the luxury goods sector.

Indeed, proper management of such suppliers – who in many cases are also financially dependent on major brands – has now become a priority for businesses, not only at the initiation of the relationship (through the development of balanced contracts) but also during its execution (with the need to adopt protocols to verify wages and health and safety conditions of sub-supplier/contractor workers).

In this context, careful preventive compliance is key, not only to avoid the risk of a large fine from the AGCM (up to €10 million), but also to avoid proceedings of a criminal nature, which could have a significant impact on the media and the resulting reputational damage.