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. Last Updated: 07/27/2016

Presidium Backs Bill Regulating Retailers

The Presidium on Monday backed a bill that would protect food producers in their business with retailers after two years of infighting between lobby groups on both sides.
The bill, which would create a single set of rules for wholesale and retail companies, did not contain a controversial proposal to limit retail markups, said First Deputy Prime Minister Viktor Zubkov, who led the drafting of the bill.
The Presidium, a scaled down Cabinet, will submit the bill to the State Duma in two days, after the legislation is amended to include proposals made by the ministers on Monday, Zubkov said, without specifying the changes.
Delayed by squabbling within the industry, the bill gained momentum three weeks ago when Prime Minister Vladimir Putin ordered the Cabinet to complete the legislation by Monday.
The bill would ban retailers from charging onerous fees on produce makers, such as bonuses for the chance to supply a certain retailer, according to a copy on the Industry and Trade Ministry web site. It would also set deadlines for retailers to pay for deliveries.
“Our goal is to build balanced and civilized relations along the whole chain from production to the store shelf and, first of all, set things right in such a sensitive area as trade in groceries,” Putin said before the Presidium studied the bill. “It’s necessary to eradicate the practice of discriminating against producers.”
Under the bill, retailers have either 10 days or 30 days — depending on the shelf life — to pay suppliers. They have 45 days to pay for goods with a shelf life of more than 30 days and 75 days for canned goods, alcohol, tobacco and chewing gum.
Putin also said producers must increase the quality of their goods and cut costs.
“Of course, we don’t have the illusions that we … will solve all retailing problems by adopting this bill,” he said. “But we need to make the first step.”
The government discussed installing a ceiling for retail markups but rejected the idea after it drew criticism from liberal economists, including Yevgeny Yasin, director for research at the Higher School of Economics, a state university.
Concerns that the government could do otherwise peaked after Putin visited a Perekryostok food store late last month and described markups there as “very high.”
The Federal Anti-Monopoly Service, which will enforce the bill if it becomes law, will impose fines ranging from 500,000 rubles ($15,200) to 1 million rubles for noncompliance and seek court orders to stop illegal practices.
Directors of retail companies that disregard such court rulings can end up with prison terms of up to two years, the service’s director, Yury Artemyev, said after the meeting.