Luxury industry under scrutiny as EU probes Gucci and others
Reuters
Published Apr 20, 2023 07:26AM ET
Updated Apr 20, 2023 01:52PM ET
By Emilio Parodi and Mimosa Spencer
MILAN/PARIS (Reuters) -Europe's flourishing luxury goods industry was under scrutiny on Thursday after European Union antitrust regulators inspected Gucci's Milan headquarters this week as part of an investigation spanning several countries and companies.
The European Commission said on Tuesday that antitrust regulators had raided companies in the fashion sector in multiple EU countries, but did not name the companies involved or specify the potential breaches it was investigating.
Reuters reported on Wednesday that as part of the probe EU antitrust regulators were inspecting a facility of luxury goods company Gucci in Milan, one of the fashion capitals of the world.
The inspection of the Gucci site was aimed at possible violations of the European Union's Article 101, according to a source with direct knowledge of the matter.
The article prohibits agreements that restrict, prevent or distort competition within the EU and which have an effect on trade between EU member states.
The source identified the site at the centre of the probe as Gucci's Milan headquarters, a former airplane factory in the eastern part of Italy's fashion capital.
The site, known as the Gucci Hub, was opened in 2016 serving as headquarters for its offices in the city, worldwide showrooms, photo studios and fashion show venue, according to Gucci's website.
Kering (EPA:PRTP), the French-listed owner of Gucci, late on Wednesday confirmed the inspection, adding that it was cooperating fully with the European Commission investigation into the industry.
No other Italian sites had been targeted for inspection, the source added.
A Kering spokesperson said the company had no further comment beyond Wednesday's statement. Rival LVMH also declined to comment on the raids.
Exane BNP Paribas (OTC:BNPQY) analyst Antoine Belge said in a research note that a conversation with Kering's investor relations team had yielded little new information.
According to Belge, the company understands the probe is part of an overall investigation involving many companies and that such inquiries can take a long time.
"These investigations are not common in luxury," he said, adding that Kering shares were unlikely to react significantly until there was further news.
Kering shares were down 0.4% at 1320 GMT on Thursday.
Companies found guilty of breaking EU rules face fines of as much as 10% of their global turnover.
Get The News You Want
A research note from Italian investment bank Equita said a potential fine of up to 10% of revenue, the worst-case scenario, would amount to 3% of Kering's market capitalisation.
The Commission said on Tuesday that the latest action was not related to other raids involving the fashion industry in the past two years.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.