Italy's antitrust regulator has fined fashion group Giorgio Armani and one of its units 3.5 million euros (USD4 million) for alleged unfair commercial practices, it said on Friday.
The Giorgio Armani group rejected the accusation and said it would appeal.
The regulator said in a statement that the two companies "issued misleading ethical and social responsibility statements in contrast with the actual working conditions found at suppliers and subcontractors".
It added that Armani outsourced most of its bag and leather accessory production to these third parties.
The authority said that although the group emphasised its attention to sustainability — using it as a marketing instrument — the external suppliers, in turn, subcontracted to other producers, which in some cases employed workers illegally and in poor health and safety conditions.
The issue already came up last year with Italian prosecutors, who placed one of Armani's units under judicial administration, a measure which was then lifted in February.
In a statement the Giorgio Armani group expressed "disappointment and bitterness" at the regulator's decision, adding it would appeal it before an Italian regional administrative court.
"(The group) always operated with the utmost fairness and transparency towards consumers, the market, and stakeholders, as demonstrated by the Group's history," it added.
Last year the competition authority opened a similar investigation into LVMH-owned Dior to assess whether it had misled consumers.
The French brand agreed on a number of remedies in May to settle the probe, considered by the regulator as appropriate and enough to avoid any sanctions.
Earlier this year also cashmere king Loro Piana and a unit of luxury brand Valentino were put under judicial administration in Italy over worker abuses in supply chains.
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