OREANDA-NEWS. December 23, 2010. The Federal Antimonopoly Service (FAS Russia) held an Expert Council on Development of Competition in Retail Trade, to which it invited representatives of the Russian Ministry of Industry and Trade, market participants, members of industry unions and associations, reported the press-centre of FAS Russia.

The Expert Council discussed the issues of enforcing provisions of the Federal Law “On the Basics of State Regulation of Trade Activities in the Russian Federation” (further on referred to as the Law on Trade) on compliance with the requirements to the contracts for supply of food products and the need to introduce amendments to the Law on Trade. Such provisions include:

1) Clarification of conditions for paying remuneration to trade organizations for additional supplies of certain quantity of food products under Part 4 Article 9 of the Law on Trade;

2) Defining the terns and conditions for accepting food products by a trade organization to calculate the payment period for such goods under Part 7 Article 9 of the Law on Trade;

3) Determining the list of unacceptable types of contracts in trade activities related to distribution of food products;

4) Regulating relations developed in connection to the contracts for supplies of food products by importers of such products;

5) Clarifying the norms of Article 14 of the Law on Trade, aimed at developing competition in retail in municipalities.

Market participants and interested government agencies did not file any proposals regarding possible amendments to Parts 4 and 7 Article 9 of the Law on Trade (items 1 and 2). Therefore, the Council decided that for the time being no changes should be made to the above provisions of the Law.

At the same time, the Russian Ministry of Agriculture presented its position to FAS Russia: the Ministry believes it would be useful to consider introducing amendments to the above provisions of the Law on Trade after adopting and coming into effect the amendments to the Code of the Russian Federation on Administrative Violations on administrative liability for violating the provisions of the Law on Trade.

On the issue of determining the list of unacceptable types of contracts in trade activities related to distribution of food products (item 3), members of the Expert Council made a decision to introduce amendments to Clause 3 Part 1 Article 13 the of Law on Trade, in such wording:

“Use a commission agreement, a trust agreement, an agent agreement or a mixed agreement, with elements of the above agreements”.

On the issue of regulating relations developed in connection to the contracts for supplies of food products by importers of such products (item 4), market participants said that there was no need to introduce such amendments to the Law on Trade.

Having discussed the issue of clarifying the norms of Article 14 of the Law on Trade, aimed at developing competition in retail in municipalities (item 5), the Antimonopoly Service would find it expedient to make changes to Article 14 of the Law on Trade, setting the 25% maximum allowable market share as a result of a transaction, except if the transaction would not reduce the number of economic entities operating on the market who are not members of the same group of persons.

The Expert Council also discussed proposals of the Association of Retail Companies (АКОRТ) for improvement of the Law on Trade and tax legislation in the field of consumer market regulation, including:

1) The right of suppliers to include contract payment for promoting food products in full in the expenses for calculating company profit tax (the Tax Code of the Russian Federation);

2) The right to include expenses for recovering goods losses in expenses of trade organizations when determining the tax base (the Tax Code of the Russian Federation);

3) Possibility to include logistics remuneration in the contract price for supply of products;

4) Possibility to determine the maximum period for retail network to agree or refuse with changing suppliers’ prices within thirty working days upon receiving the offer from a supplier. Trade networks must not apply penalties for undersupplies if they do not accept the new prices and for related termination of shipments by the supplier, provided the supplier timely and correctly informs about increase of its ex-work prices.

Regarding АКОRТ proposals on amendments to the tax legislation (items 1, 2), the Expert Council concluded that further discussion should involve the Russian Ministry of Finances.

Regarding the proposal to include logistics remuneration in the contract price for supply of products (item 3), FAS Russia thinks that logistic services constitute a separate kind of services and must be paid under a separate contract. Representatives of suppliers of food products were of the similar opinion. Taking this into account, the Council thought it was not necessary to make relevant amendments to the Law on Trade.

The Expert Council also discussed the issue of determining the maximum period for retail network to agree or refuse with changing suppliers’ prices within thirty working days upon receiving the offer from a supplier, and on applying penalties by trade networks for undersupplies if they do not accept the new prices and for related termination of shipments by the supplier, provided the supplier timely and correctly informs about increase of its ex-work prices (item 4).

Having discussed the proposal, the Council decided to further consider proposals of market participants as amendments to particular Articles of the Law on Trade.