What: Dior agrees to pay EUR 2 million and implement new supplier vetting protocols following an Italian competition authority investigation into labour exploitation in its supply chain.

Why it is important: The case demonstrates how regulatory scrutiny is compelling luxury brands to take concrete actions on supply chain transparency, moving beyond voluntary commitments to measurable reforms.

Dior has reached a settlement with Italy's competition watchdog, agreeing to pay EUR 2 million to support labour exploitation victims and implement enhanced supplier monitoring protocols. The Authority for the Guarantee of Competition and the Market closed its investigation without establishing infringement after Dior committed to comprehensive reforms. These include revising ethics and social responsibility statements, implementing new supplier vetting procedures, and providing training in labour law and ethics. The settlement follows earlier Milan court rulings that had required special administrators to oversee improvements at Dior's outsourced handbag suppliers, where investigations revealed concerning conditions among Chinese workers. The agreement demonstrates Dior's commitment to supply chain transparency, with the company pledging to train marketing and communications employees on consumer protection laws. This development is particularly significant for the luxury sector, where brands increasingly face scrutiny over their manufacturing practices and the disconnect between premium pricing and supply chain ethics.

IADS Notes: Dior's EUR 2 million settlement with Italy's competition authority marks a pivotal moment in luxury retail's evolving approach to supply chain oversight. This development follows the brand's December 2024 establishment of an in-house industrial division, demonstrating the industry's shift towards greater manufacturing control. The settlement coincides with broader challenges in supply chain reporting, as revealed in February 2025 :cite[o6], where luxury brands struggle with complex compliance requirements. This regulatory pressure has prompted industry-wide responses, exemplified by new sourcing protocols implemented in January 2025. The timing is particularly significant as the luxury sector faces its first value creation decline since 2016, forcing brands to balance ethical commitments with financial pressures. The industry's response, including LVMH's March 2025 restructuring, suggests a fundamental transformation in how luxury brands approach operational control and ethical compliance.

Dior to pay EUR 2mn to help labour abuse victims in Italian watchdog settlement