In May 2015 the RF State Duma adopted at the first reading the Draft Law on Amendments to Certain Legal Acts of the RF Concerning Antimonopoly Regulation and Ensuring Food Safety1 (“Draft Law”), which was introduced by a group of deputies led by I. A. Yarovaya. The Draft Law is to amend Federal Law No. 381-FZ on the Fundamentals of State Regulation of Trade Activities in the Russian Federation dated 28 December 2009 (“Retail Law”) and the RF Administrative Penal Code (APeC). The principal changes introduced by the Draft Law pursue the following objectives:
- Reducing the percentage of bonuses (fee) that suppliers of food goods pay retailers to promote goods (known as “retrobonuses”) – from the current 10% to 3% of the price of food goods;
- A total prohibition on payments for marketing, logistics, and other services from suppliers to retailers (including payments for changing the assortment of goods);
- A significant reduction in the deferred payment period for supplying food goods to chains: perishable goods (shelf life less than 10 days) from 10 to 5 days, goods with a shelf life of 10 to 30 days – to 20 days instead of 30, goods with a shelf life of more than a month, including alcoholic beverages made in Russia – from 45 days to 35 days;
- Revising antimonopoly rules for retail chains and food suppliers, in particular, prohibiting the conclusion between them of agency agreements of any kind for retail activities (this move is intended to regulate the practice of retail chains imposing conditions through the conclusion of agency agreements);
- Retail chains and suppliers will be obligated to notify FAS Russia and its territorial bodies of all cases of conclusion of supply agreements and other agreements under which total payments exceed 3% of the price of the supplied food goods;
- Introducing a new section in the RF APeC providing fines for discriminatory acts by retail chains with respect to suppliers in the amount of 2 to 5 million rubles.
The Draft Law has met with resistance from major retail chains, which have attempted to delay its final adoption and succeeded in having changes made to the amendments in the second reading. Discussions took a whole year. Three versions of government changes to the Draft Law were prepared over that period.
However, in April 2016, following the direct instructions of RF President Vladimir Putin in response to a question from the Draft Law’s initiator I. A. Yarovaya during the “direct line” with the President, the government commission for drafting laws agreed changes developed by the RF Ministry of Industry and Trade. On 20 April 2016, Deputy Prime Minister A. Dvorkovich reported to the RF President that the government version of the amendments had been sent to the RF State Duma2.
The Government amendments concern the following main issues:
- terms of payment for food goods from the date of acceptance: for perishable goods (shelf-life more than 10 days) it is proposed to reduce the payment period from 10 to 8 days, for goods with a shelf life of from 10 days to 30 days, it is proposed to reduce the payment period from 30 to 25 days, and for goods with a shelf life of more than 30 days, including alcoholic beverages made in Russia, it is proposed to reduce the payment period from 45 days to 40 days.
- the retailer’s bonus must be no more than 5% of the price of the purchased food goods, and there is a strictly limited list of services that can be provided by the retailer – goods promotion services, goods processing, preparation, and packaging services, and similar services. Logistics services are taken out of the restrictions on the size of bonuses retailers can receive from suppliers.
- expansion of the competence of FAS Russia to supervise retail chains and suppliers by giving FAS Russia the power to monitor observation of the “rights and obligations of retail chains and food suppliers in connection with the conclusion of food supply agreements” provided under article 9 of the Retail Law (FAS Russia currently only monitors “compliance with the antimonopoly requirements of the Retail Law and its prohibitions”, particularly on the creation of discriminatory conditions, imposing contractual conditions on counterparties, wholesale trading using agency agreements or elements thereof, etc.3).
This compromise version of the amendments is expected to be adopted in this session of the RF State Duma. Once signed by the RF President, these rules will enter into force after 180 days, or one year with respect to the size of the bonus (fee), since time will be required to review the conditions of thousands of agreements between chains and suppliers.
The final version of the amendments to the Retail Law will become clear after discussion of the compromise Draft Law in the RF State Duma. In any case, after the adoption of the Draft Law the relations between retails and suppliers will undergo significant changes, and the powers of FAS Russia in this area will be expanded.