MILAN, Italy: Giorgio Armani is facing renewed scrutiny over labor conditions in its supply chain after Italy’s antitrust authority fined the luxury fashion house 3.5 million euros (US$4 million) for what it called unfair commercial practices.

The regulator said Armani and one of its units misled consumers by promoting ethical and sustainable values in its marketing, while outsourcing the bulk of its leather goods production to suppliers and subcontractors where working conditions were found to be substandard.

The investigation found that some of these third-party producers employed workers illegally and in poor health and safety environments, contradicting Armani’s stated commitments to corporate responsibility.

The fashion group rejected the findings and said it would challenge the decision in court. “(The group) always operated with the utmost fairness and transparency towards consumers, the market, and stakeholders, as demonstrated by the Group’s history,” Armani said in a statement, expressing “disappointment and bitterness” over the ruling.

The watchdog claimed Armani “issued misleading ethical and social responsibility statements in contrast with the actual working conditions found at suppliers and subcontractors,” and said the brand had used sustainability as a marketing tool while failing to ensure that its production chain adhered to those values.

The case stems in part from a broader investigation that began last year, when Italian prosecutors placed one of Armani’s units under judicial administration amid reports of labor abuse. That measure was lifted in February, but regulatory scrutiny has continued.

Italy’s fashion sector has been under increasing pressure to improve labor practices across its subcontracting networks. Earlier this year, Loro Piana and a Valentino unit were also placed under court oversight over alleged worker mistreatment.