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Major Changes To Trade Bill Proposed

Russia’s Ministry of Economic Development did not approve the latest version of a bill on retail trade and is proposing to eliminate one of its most controversial articles - that on lowering the maximum market share a single company can hold to 25%.

The bill's first reading in the State Duma was held on September 11 and its second is planned for the beginning of November; however, many government offices have concerns with the bill. According to an employee of the Ministry of Economic Development, the ministry has prepared a negative report on it stating that the ministry recommends that Article 16 (on the maximum market share) be removed.

The bill, in its current version, prohibits chains from acquiring and building new stores if they have a turnover of more than 1 billion rubles per year and if their sales (in monetary terms) amount to greater than 25% of the relevant officially defined neighborhood districts in Moscow and St. Petersburg. If the retail chain violates these regulations, the Federal Antimonopoly Service can file a claim with an arbitration court to declare the chain’s actions illegal.

The article will not be eliminated from the bill, asserts Deputy Minister of Industry and Trade Stanislav Naumov, who presented the bill in the State Duma. He stated that some sort of compromise will be reached incorporating the Duma deputies’ various suggestions. For example, the limit on retail chains’ sales volume may be altered to consider the market share of an entire region rather than a particular neighborhood.

The Deputy Chairman of the Duma Committee on Economic Policy is supporting the removal of current one billion ruble upper limit on sales volume. Setting a total value for an upper limit simply isn’t feasible: it does not account for inflation and many of today’s supermarket chains already exceed the limit and would have to be divided up, the deputy notes. Retail chain spokesmen are not hiding the fact that they are against the bill and against any government interference in their business practices.

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