The European luxury goods industry faces increased scrutiny as European Union (EU) antitrust regulators initiated an inspection at a Gucci facility in Milan on Thursday. The investigation, which encompasses multiple countries, is focused on potential violations of the EU's Article 101, a source with direct knowledge of the matter revealed.
Article 101 prohibits agreements that restrict, prevent, or distort competition within the EU and impact trade between EU member states. The Gucci site under investigation is associated with the production of travel items, handbags, and other leather goods.
Kering, the French-listed parent company of Gucci, confirmed the inspection late on Wednesday, as reported by Reuters. Kering is fully cooperating with the European Commission's investigation into the luxury goods industry. According to the source, no other Italian sites were targeted for inspection.
A Kering spokesperson stated that the company had no further comments beyond Wednesday's statement, while rival LVMH declined to comment on the raids.
Exane BNP Paribas analyst Antoine Belge noted in a research report that a conversation with Kering's investor relations team provided little new information. Belge stated that the company believes the probe is part of a broader investigation involving numerous companies and that such inquiries can be lengthy.
"These investigations are not common in luxury," Belge said, adding that Kering shares would likely not experience significant fluctuations until more news emerged. As of midday Thursday, Kering shares were down 0.9%.
On Tuesday, the European Commission disclosed that antitrust regulators had raided companies in the fashion sector across various EU countries but did not identify the companies involved or the potential violations under investigation.
Companies found guilty of violating EU rules could face fines of up to 10% of their global revenue. Italian investment bank Equita's research note indicated that a potential fine of up to 10% of revenue, representing the worst-case scenario, would amount to 3% of Kering's market capitalization.
The Commission clarified on Tuesday that the recent actions were not related to other raids involving the fashion industry over the past two years.
