News in state regulation of trade

On July 15, 2016, Federal Law No.273-FZ “On introducing amendments to Federal Law ‘On the bases of state regulation of trade activity in the Russian Federation’ and the Code of Administrative Offences of the Russian Federation” (hereinafter the “Law”) dated 03.07.2016 took effect, amending various aspects of state regulation of trade related to food retail.

The Law makes the following changes to the current regulation of food retail:

1)  The concept of “retail network” is clarified and the term “goods promotion services” is introduced and includes advertisement of goods, their special layout, consumer demand research, etc.

2)   The maximum aggregate amount of fees that a food supplier pays to a retailer for buying a certain amount of food and for goods promotion services, logistics services, product preparation services and other similar services, has been decreased from 10% to 5% of the price of food purchased.

3)   A ban is placed on food suppliers and retailers charging each other the following fees:

-      fee for the right to supply foods to operating and opening trade facilities;

-      fee for changing the food assortment, as well as any remuneration to suppliers that is not provided for by law.

Food suppliers and retailers are also banned from compensating to each other the expenses tied to loss or damage of foods after the ownership title to such foods is transferred, as well as expenses not connected with performing the food supply agreements and subsequent sale of a specific batch of such goods.

4)   The threshold timeframes for paying for foods based on their shelf life have been decreased.

5)   Antitrust rules in effect for food retailers and suppliers have been adjusted, and more.

We should note that certain provisions of the law on state regulation of trade in food retail will apply not only directly to food suppliers and retailers, but also to entities being part of the group of entities with the supplier or retailer under the Russian competition protection law.

The Law also amends provisions of the Code of Administrative Offences of the Russian Federation as regards administrative liability for violating antitrust rules pertaining to trade, as well as for violating the conditions for entering into a food supply agreement when engaged in trade.

Such breaches can lead to an administrative fine for officials in the amount from 10,000 to 200,000 rubles or disqualification for a term from 1 to 3 years, and an administrative fine for legal entities from 1 million to 5 million rubles.

Food supply agreements entered into prior to the Law taking effect must be made compliant with the new rules by January 1, 2017. Otherwise, the agreement terms that fail to comply with the Law will be deemed void.