Retail chains and food producers are on the brink of a legal conflict — industry associations’ representatives have requested FAS Russia to assess whether retailers' actions comply with antitrust legislation. Let's examine the contractual changes that have sparked serious disputes and what sanctions may be imposed.
The letter from the National Union of Bakers, the Fish Union "Rybny Soyuz", Soyuznapitki Association, and Rusprodsoyuz Association indicates disagreements on the following issues:
- Retailers insist on incorporating the difference between the shelf price of a product and its purchase price in contracts. If the actual gain does not reach the amount specified in the contract, the supplier will be obligated to compensate for the lost profit through a system of additional payments, penalties and discounts. Failure by the supplier to comply with these requirements may lead to a reduction in the retailer's purchasing selection.
- One of the leading retail chains has implemented technical restrictions that prevent suppliers from setting an end date for promotional prices, making the discounts effectively permanent.
In an interview with «Kommersant FM» Sergei Zagraevsky, Counsel of Antitrust and Public Procurement Practice, notes the duality of the legal field in this matter:
- Enforcement of the Federal Law on the Protection of Competition is complicated: FAS Russia has assessed the actions of retailers based on their dominant position in the field. However, given the highly competitive nature of the retail market, proving the dominance of a single market participant for the application of the relevant rules is difficult;
- The Trade Law is a priority: it gives regulators the tools to assess said practices as illegal. According to our expert, the retailers' demands are of an imposition nature, as the supplier's refusal entails the loss of shelf space.
If FAS Russia recognizes that the networks violate the antimonopoly requirements of the Trade Law, the consequences may be as follows:
- Imposition of an administrative fine in the amount of 2.5 to 5 million rubles for each violation;
- Issuance of an order to cease of violations and update the contracts in accordance with applicable legislation.
The Federal Antimonopoly Service has acknowledged receipt of the food producers' request and assured that it will be reviewed in accordance with established procedures. The regulator's decision could have serious consequences for the entire industry.