The European Union antitrust regulators on Thursday began investigating a Gucci facility in Milan as part of a broader investigation that covers several countries.
According to Reuters, the scrutiny follows concerns over Europe’s booming luxury goods industry.
The inspection at the luxury brand’s facility in Milan focuses on possible violations of Article 101 of the European Union, which prohibits agreements that limit or distort competition within the EU and impact trade between EU member states.
Such agreements may include price-fixing, market allocation, or supply limitations. Companies found to have violated this article may face penalties and fines by the EU antitrust regulators.
According to the report, the French company that owns Gucci, Kering confirmed that the inspection is taking place and is cooperating fully with the European Commission’s inquiry into the industry.
According to a source with direct knowledge of the matter, no other Italian sites were inspected.
An analyst from Exane BNP Paribas, Antoine Belge spoke with Kering’s investor relations team, but they did not provide much new information.
Belge stated that Kering understands that the investigation covers multiple companies and that these probes can take a long time.
He noted that such investigations are uncommon in the luxury sector and that Kering’s shares are unlikely to be impacted until more information is revealed.
As of midday on Thursday, Kering’s shares had decreased by 0.9 percent.
The European Commission has not revealed the identities of the fashion companies being investigated or the specific violations being probed, stating only that antitrust regulators have conducted raids across several EU countries.
If companies are found to have violated EU regulations, they could be fined up to 10 per cent of their worldwide revenue.
An Italian investment bank Equita in its research note said “a potential fine of up to 10% of revenue, the worst-case scenario, would amount to 3% of Kering’s market capitalisation.”