FAS Russia's activities on developing competition in retail

In the last 15 years Russia has made a transition from planned economy to market economy. Similar changes took place in the domestic retail sector - small stands and kiosks have been replaced with shopping centers and supermarkets. Along with positive changes, such as improved quality and level of customer services, product expansion and centralized management, it has some negative sides.



Transformation of retail trade into big trade networks (retailers) allowed the latter, despite their seemingly small market share, dictate the rules of the game and determine the network entry conditions for suppliers and producers. Such influence of retailers upon competition is explained by growing volumes of production and imported goods coupled with deficit of trading outlets as well as similarity of relationship practices between retailers and suppliers.



Some of retailers' abusive practices include: charging suppliers for access to retailers' network of stores; imposing pricing policy upon suppliers; unilateral failure to fulfill contract obligations and unilateral termination of supply contracts; and supplier's compensation of losses caused by theft in retailer's trading outlets.



Due to the above, and in order to eliminate possible competition restriction and infringement of the rights of suppliers and producers, legislative regulation of legal relationship in the field is required.



Currently Russian Ministry of Economic Development and Trade, jointly with the Federal Antimonopoly Service, is developing the Law «On Domestic Trade», which, along with other provisions regulating legal relationship in this field, will contain some antimonopoly norms. The latter will define position of an economic entity (retailer) as dominant when its share on the local retail market exceeds 10%.



In addition, to support and develop retail competition, it is planned to define the maximum retailer's share on a local retail market at 35%. Exceeding the threshold will only be allowed if it does not create possibility for individual actors to eliminate competition on a relevant goods market, and also if increased retailer's share leads or may lead to:



- Improving production, growing goods sales, stimulating technical and economic progress or increasing competitive ability of the Russian goods on global markets;

- Creating advantages (benefits) to customers proportionate to the advantages (benefits) gained by the retailer due to its increased share on the relevant goods market.



It is further planned to introduce the norms regulating «group (»collective») dominance» by defining aggregate shares of retailers on relevant goods markets and taking into account specifics of the field in question.



Therefore, adopting the Law «On Domestic Trade» that contain the above-mentioned antimonopoly provisions will allow to statutory regulate relationship between economic entities involved in retail, prevent monopolization of retail market and facilitate competition development.