© Reuters. People walk outside a Gucci store in Rome, April 20, 2023. REUTERS/Remo Casilli
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PARIS (Reuters) – Europe’s burgeoning luxury goods industry came under scrutiny on Thursday after European Union antitrust regulators began inspecting Gucci’s Milan facility as part of a multi-country investigation.
The search for Gucci, at a site associated with the manufacture of travel accessories, handbags and other leather goods, was aimed at possible violations of Article 101 of the European Union, according to a source familiar with the matter.
The article prohibits agreements that restrict, prevent or distort competition within the European Union and that have an impact on trade between European Union member states.
dry Gucci’s French-listed owner, EPA, confirmed late Wednesday the Reuters report on the inspection, adding that it was cooperating fully with the European Commission’s investigation into the industry.
The source added that no other Italian sites were targeted for inspection.
A Kering spokesperson said the company had no other comment beyond Wednesday’s statement. Rival LVMH also declined to comment on the strikes.
A conversation with Kering’s investor relations team yielded little new information, said Antoine Belge, an analyst at Exane BNP Paribas (OTC:), in a research note.
According to Belge, the company understands that the investigation is part of a comprehensive investigation involving many companies and that such inquiries can take a significant amount of time.
“These investigations are not uncommon in the luxury arena,” he said, adding that Kering stock is unlikely to react significantly until further news is available.
Shares were down 0.9% through midday Thursday.
The European Commission said on Tuesday that antitrust authorities have raided companies in the fashion sector in several European Union countries, but it did not name the companies involved or specify the possible violations it is investigating.
Companies found guilty of breaching EU rules face fines of up to 10% of their global turnover.
A potential fine of up to 10% of revenue, a worst-case scenario, would amount to 3% of Kering’s market capitalization, said a research note from Italian investment bank Equita.
On Tuesday, the commission said the latest measure was not linked to other raids involving the fashion industry in the past two years.