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- The law is prescribed for trading networks: the authorities have changed the rules of the game between suppliers and retail
The law is prescribed for trading networks: the authorities have changed the rules of the game between suppliers and retail
The law on supplies to retail chains adopted by the Federal Assembly is designed to balance the rights of suppliers and retailers, reduce the risk of unjustified fines and increase the transparency of contractual relations. Nevertheless, experts warn of the continuing risks of circumvention of regulations, the need for enhanced control and additional measures to protect small producers. The real impact of the law on the food market will depend on how its implementation is organized and how effectively the FAS and other bodies will be able to curb unfair practices. Izvestia was being investigated.
Penalty maneuver and supplier's burden
The Russian parliament has finally adopted a draft law, developed with the participation of the Federal Antimonopoly Service (FAS), which introduces significant changes to the rules of interaction between food suppliers and retail chains. The innovations are designed to solve the problem of imposing orders without confirmation and the associated penalties, which, according to the regulator, placed a burden on manufacturers and ultimately on consumers.
As the FAS informed Izvestia, individual supply contracts still contained a condition on the obligation of suppliers to deliver goods on orders from retail chains without prior confirmation of the possibility of such delivery. Manufacturers pointed to situations where networks increased order volumes unplanned, including due to errors in forecasting demand. Suppliers could not refuse to fulfill such orders for fear of fines, which, according to the FAS, turned from an interim measure into an additional source of income for retailers. Manufacturers had to compensate for these costs by increasing the cost of goods.
Olga Epifanova, Senator, Honored Worker of Trade of the Russian Federation, comments on the current situation: "It is now important for the networks that the goods are on the shelf even during the period of high demand, hence these terms of the contract. But in this situation, the entire burden falls on the supplier. Not only does he have to increase production at all costs, he suffers losses if the products are not bought." She also adds that the manufacturer is often forced to include the risks of a penalty in the price of the product.
Dmitry Vostrikov, executive director of the Rusprodsoyuz association, confirms this problem: "Now the supplier is obliged to supply any volume of goods requested by the network (even if it is an annual volume), regardless of whether he confirmed the order received from the network or not. Otherwise, the supplier will face a fine." He notes that for some chains, fines may exceed the average profitability in the food industry, which leads to abuse by networks that use this practice to generate additional profits. According to him, suppliers are forced to keep a constant supply of food, and this approach still does not guarantee the availability of goods on the shelf for customers.
Soyuzmoloko supports the creation of fair rules for the operation of retail chains and suppliers. The problem of fines for non-delivery is quite acute, according to the Union. According to the current agreements, the supplier does not have the right to refuse to fulfill the order, even if it does not have the necessary raw materials, ingredients, packaging or production facilities. At the same time, the retail chain is not obliged to place orders for fixed volumes and may unilaterally terminate the placement. Soyuzmoloko estimates that the total amount of fines for non-delivery in the dairy industry may reach 3-4 billion rubles.
As the Chairman of the Presidium of the Association of Retail Trade Companies (ACORT) told Izvestia Stanislav Bogdanov, the main advantage of the adopted bill is that it reduces the risks of supply disruptions, helping to avoid one—time spot transactions and increase the share of long-term contracts that are necessary to ensure price and physical stability of supplies in the food market.
According to the Ministry of Agriculture, the contracts that are currently in force must be brought into line with this norm by March 1, 2026. If this does not happen within the specified period, they will be declared invalid, the department stressed.
According to the Russian Ministry of Agriculture, which supports this initiative, the amendments to the law will allow agricultural producers to avoid excessive sanctions, which will reduce additional costs and have a positive effect on selling prices.
Legislative response and expected changes
The adopted bill introduces into the Law on Trade a ban on establishing in contracts the supplier's obligation to fulfill an order before confirming the possibility of its delivery. In the absence of such confirmation, suppliers should not be held responsible. The FAS believes that this will contribute to the development of the market, restore suppliers' rights to freedom of contract and provide consumers with goods at affordable prices, as the proposals were prepared based on the results of an analysis of manufacturers' complaints.
Experts have mostly positive expectations from the new law. Dmitry Vostrikov, in turn, expects that the bill will remove additional risks from suppliers and encourage networks to plan normally.
— The new rules will make it possible to fix in the supply contract how much, when and which products the supplier must deliver in advance, as a result of which retail chains will not be able to collect penalties if the supplier physically did not have the required volume of products and refused a spontaneous order that arrived a few days before the actual shipment of the goods. For the public, this will guarantee the availability of the product, as the retailer will be able to find a similar product from another manufacturer. The law will also help slow down monopolization and increase competition," the Izvestia source believes.
Representatives of regional business also express their support for the initiative. Andrey Yandulin, Director of Sovetsky District Bakery LLC (Mari El Republic), fully supports the law: "In our practice, relationships with retail chains have always been based on mutually beneficial and transparent terms, and we have not encountered any serious problems. The electronic data exchange that we use allows us to clearly record all stages of cooperation, eliminating misunderstandings and disputes." He is confident that the law will help streamline cooperation.
In general, the Director of the ANO Institute for the Development of Entrepreneurship and Economics (IRPE) characterizes the draft law as positive and timely Artur Gafarov. According to him, the text of the adopted law has changed throughout its passage in the State Duma, and the current version embodies a certain compromise: "it takes into account the position of manufacturers on the inadmissibility of placing orders from retail chains in excess of the agreed supply volumes. At the same time, it does not overly limit the established practices of interaction between retailers and suppliers over the years." Gafarov notes that the initial "maximalist" approach with strict coordination of schedules could force the networks to "one-time" contracts.
Skepticism, risks, and alternative views
Despite the positive expectations, a number of experts express concerns. The Fish Union notes: "Unfortunately, the final wording included in the law does not take into account all the recommendations of suppliers. Time will tell how it will be applied in practice." The Union hopes for clarifications from the FAS and the suppression of attempts to circumvent the norm, fearing that "individual retail representatives will find ways to circumvent the ban and continue to violate the Code of Good Practices."
Dmitry Vostrikov also points out one of the key risks associated with circumventing the new rules: "It is important that retail chains do not circumvent the adopted amendments by prescribing maximum order volumes in the contract without planning trade names. The FAS will closely monitor such abuses and take appropriate measures against unscrupulous trade operators."
Vener Ilyasov, Chairman of the Board of Bashpotrebsoyuz, expresses serious doubts about practical effectiveness, citing many years of experience: "Our experience shows that retail chains always find ways to maintain control over supply chains." For real changes, he suggests the introduction of mandatory pre-approval of contract changes with supplier associations, the creation of rapid out-of-court dispute resolution procedures and strict monitoring of "informal" sanctions.
Although the initiative is recognized as correct, its real effectiveness will depend on its execution, said Yuri Ptushkin, chairman of the Leningrad Regional Union of Consumer Societies. He fears that large retailers will find ways to circumvent the rules, "for example, replacing fines with "voluntary compensation" or simply reducing the number of contracts with small suppliers, shifting risks to them even at the negotiation stage." Ptushkin points out the systemic problem of small producers' lack of resources for legal protection and suggests simplifying access to arbitration, developing class action lawsuits and grant support for consumer cooperation organizations.
An alternative view of the problem is offered by the founder of the Agency for Rational Practices and Methods for Business, ex-employee of retail chains Anna Tishchenko. She questions the thesis about the "arbitrariness of networks," arguing that networks are not interested in purchasing extra volumes, and the increase in orders is due to increased demand. "Manufacturers are interested in increasing sales and should not limit them by not confirming or fulfilling orders," Tishchenko believes. She believes that the new rules may deprive small suppliers of a competitive advantage, and notes that for more than 10 years there have been special EDI and EDI systems for confirming supplies, but not all suppliers use them. Tishchenko considers it logical to give the opportunity to refer to a confirmed order only to those who work through EDO and EDI.
Dmitry Tokarev, managing partner of the Retail consulting company, is also skeptical about the innovations. In his opinion, the changes do not bring additional efficiency, since fines could have been challenged in court before, but suppliers are afraid of losing contracts. "And well—paid lawyers from federal networks will come up with new schemes," he predicts. According to him, the main risk for a supplier is not the relationship with the network, but the ability to build their brands and planning and logistics processes. "Anyone who fails to transport goods as needed by the network, even if there are good but little—known goods, will be thrown out of the network," Tokarev concludes, adding that the strategy of fines was introduced to discipline suppliers, but over time turned into an income item.
Summing up, Artur Gafarov, Director of the IRPE, notes that the subsequent practice of law enforcement will show which risks remain uncovered.
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