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Armani and Dior, two popular luxury brands, are under scrutiny as Italy’s competition authority investigates potential consumer misguidance related to their ethical practices.

The investigation arises from prosecutor inquiries into worker exploitation at the brands’ suppliers. The competition watchdog stated, “In both cases, the companies may have issued untrue statements about their ethics and social responsibility, in particular with regard to working conditions and compliance with the law by their suppliers.” While the companies emphasize “craftsmanship and quality,” the watchdog revealed that suppliers allegedly employed workers under poor conditions, with inadequate wages and excessive hours.

Prosecutors in Milan found workshops on the city’s outskirts where underpaid, often undocumented immigrants produced leather goods for Armani and Dior. These items were then sold to the luxury brands at a fraction of their retail price. Several Chinese-owned Italian suppliers of these brands are under investigation, and commissioners have been appointed to oversee the companies’ units involved in outsourcing handbag production.

Dior, controlled by French luxury giant LVMH, said it was cooperating with Italian authorities. They added, “no new order will be made in the future with these suppliers.”

If found violating Italian consumer code, both companies could face fines from $5,500 to $11 million.