Retailers May Be Forced To Put Markups Online

VedomostiProposed changes to the law on trade would require disclosures quarterly.

Retail chains and their suppliers may be required to publish their prices and markups, according to proposed changes to the bill on trade, which State Duma deputies hope will help stop middlemen from driving up inflation.

But the changes, introduced ahead of the bill's key second reading on Dec. 9, are opposed by retailers because they would be required to release their commercial secrets.

The Duma's Economic Policy and Entrepreneurship Committee wants to force retail chains and their suppliers to publish the prices of the goods they have sold and the size of the markup quarterly on the Internet. The changes to the proposed law on trade, a copy of which was obtained by Vedomosti, have been sent to the presidential administration and the Cabinet for approval.

The changes, which essentially force a company to disclose its purchase prices, will apply to a long list of items — everything from socially important goods to technologically sophisticated home appliances, everyday chemicals, furniture and cars.

Technologically sophisticated goods will include virtually all electronics, said Anton Guskov, a spokesman for the Ratek trade association, which includes computer and appliance makers.

The initiative was proposed by United Russia's Institute for Economics and Legislation, said Deputy Yevgeny Fyodorov, who chairs the Economic Policy and Entrepreneurship Committee.

The changes are intended to fight middlemen, since it will be immediately clear from the information posted online where the biggest price hikes are happening, Fyodorov said. "The logic is simple: If you want to be involved in commerce, you should understand that it should be transparent in terms of information."

The presidential administration and the Cabinet will state their official positions on the changes Wednesday, he said.

The government has already indicated that it will come out against the proposal, since information about markups is a commercial secret, said a different member of the Duma committee. Fyodorov said he was aware of this but it was possible that deputies would nonetheless consider the amendment.

"Approval and discussion with the interested parties is ongoing. There have been cases where we've put to a vote legislative initiatives that weren't approved by the government," he said.

The office of First Deputy Prime Minister Viktor Zubkov, who is overseeing the passage of the law, is not yet familiar with the deputies' proposal, a spokesman said, adding that Zubkov was expected to discuss the changes with lawmakers Tuesday.

Officials in the presidential administration reached by Vedomosti said they had not heard about the proposal. The Kremlin's press service declined comment.

Businesses, however, came out against the plan. "So what happened to commercial secrets? Has the whole idea of a market ceased to exist here?" said Dmitry Maslov, chief executive of the Spar supermarket chain.

He said he hoped that the law would be kicked around for a while longer until it reaches the point of complete absurdity and everyone realizes that no one really wants it to pass.

Leonid Tyukavkin, Tekhnosila's vice president for strategy, said the terms of deliveries were confidential and that he was categorically opposed to the proposal. Besides, publishing the price without other contract terms, such as the exclusivity of a model and bonuses for volume, would say little about a company's actual profit from selling a given product, he said.

Publishing all terms of a contract would blatantly contradict the principles of competition, which are used everywhere, Tyukavkin added.

Vadim Novikov, a senior researcher at the government's Academy of National Economy, said he wasn't surprised to see the initiative and that it was the logical continuation of the state's regulation strategy, which has also been used with gasoline and medicine.

In and of themselves, markups don't say anything, he said, adding that it would be more interesting to consider the profitability from sales, particularly if the data is audited.

The law on trade would ban all bonuses, except for ones based on volume sold, and even that would be limited to 10 percent for Russian goods. For socially significant products, it would be prohibited altogether. As of July 1, 2010, companies controlling 25 percent of the market within a municipal entity would be prohibited from expanding there.