Timophey Nizhegorodtsev: We are glad to see that the law on trade is alive

On 20 September 2016, the Head of FAS Department for Control over Social Sphere and Trade, Timophey Nizhegorodtsev took part in the International Research-to-Practice Conference on “Ensuring Competition in Trade Activities”. The FAS representative made a report on the latest changes in antimonopoly regulation of retail trade.

Timophey Nizhegorodtsev reminded that the amendments to the Law on Trade and the Code of the Russian Federation on Administrative Violations, which came into effect on 15 July 2016, provide for a transitional period up to 1 January 2017, and when it expires all contracts between retail chains and suppliers must be adjusted in line with the new edition of the law. Until that moment the parties can abide to the terms of the contracts concluded by 15 July 2016.

“Until 1 January 2017, we are investigating only those claims that relate to the new contractual campaign”, clarified the speaker. He also emphasized that “if new contracts being concluded by suppliers with retail chains from 15 July to 1 January, have elements of breaching the new trade law, then FAS regional Offices should investigate these particular relations”.

Timophey Nizhegorodtsev discussed with the Conference participants unscheduled head-to-toe inspections of retail chains: “From 1 January 2017 we expect a relevant order from the Government of the Russian Federation”. The main objective of such inspections is to monitor whether the new requirements of the trade law are observed. According to the speaker, “the purpose of the monitoring will also include exposing new unfair practices”.

Then Mr. Nizhegorodtsev looked in more detail at some new norms of the law, including the provisions that restrict the maximum total remuneration and payment for the services to promote goods.

Talking about legislative restriction of payments to retail chains, Timophey Nizhegorodtsev reminded that under Clause 4 Article 9 of the Law on Trade “the total remuneration due to acquiring a particular quantity of food goods and the payment for goods promotion services and other services cannot exceed 5% of the price of the acquired food products”.

“Remuneration for acquiring a particular quantity of goods can be included in a supply contract and is estimated in percentage of the price for the acquired goods. The allowable remuneration for the volume and the period of its accruals and payments must be linked to the volume and supplies of particular goods”, stated Timophey Nizhegorodtsev.

At the same time supply contracts must not include provisions on rendering fee-based services.

“Rendering services for promoting goods, logistical services, services for preparing, treatment, packaging these goods and other such services are the subject of a contract of fee-paid services. Their costs must be determined in a fixed sum estimated on the basis of the costs of a particular good item, with regard to which such services are rendered, and the period of rendering such services rather than in percentage”,  emphasized the FAS representative.

Timophey Nizhegorodtsev also covered the theme of giving discounts to retail chains by suppliers.

“Giving discounts by suppliers, that are not related to trade companies executing terms and conditions of food product supply contracts as well as conditions of agreements on  the remuneration package and payment for services and that are not  the results of rendering goods promotion services are allowed provided  that the contract price for supplying food products will be determined in a contract at the time of concluding it, based on the price of the entire batch of the food products to be supplied”, said Mr. Nizhegorodtsev.

He added that allowability of seasonal discounts and discounts associated with an increased acquired volume of food products and reduced shelf life are under discussions.

The Head of FAS Department for Control over Social Sphere and Trade reminded that FAS has drafted and published such explanations of the new provisions of the Law on Trade on its official web-site.

Timophey Nizhegorodtsev pointed out that “monitoring, which starts on 1 January, can reveal new issues that we don’t know of yet”. “The objective for you and us will be to see all this and if a particular practice is unfair, duly reflect it in the law”.

The International Research-to-Practice Conference on “Ensuring Competition in Trade Activities” took place on 20 September 2016 in Kazan. The event was organized by FAS, FAS Centre for Education and Methodics and FAS Office in the Republic of Tatarstan.