The President Signs Amendments to the Law on Trade

06.07.2016

Legal Update No. 563

Goltsblat BLP advises that, on 4 July 2016, the President signed amendments to Federal Law No. 381-FZ “On the Fundamentals of State Regulation of Trade in the Russian Federation” dated 28 December 2009 (the “Law on Trade”).

The draft amendments, also known as I.A. Yarovaya’s bill, stirred up vigorous discussion on the market that lasted more than six months, with manufacturers, suppliers and retail chains all responding in a variety of ways.

Although certain provisions of the document are pretty tough, it does open up new opportunities for applying clearer and more transparent rules to relations between suppliers and retailers.

The new norms will equally affect food product suppliers, retailers and distributors, including those dealing in alcohol-free beverages, baby food, alcohol, beer and biologically active supplements.

Suppliers and retailers will be able to minimise their business costs of adapting to the new legislative developments by introducing the necessary modifications in their current contracts. Trade terms must be brought into line with the new requirements by 1 January 2017.

Key innovations:

  • The maximum allowable purchase volume reward (bonus) has been halved to 5% (currently 10%).
  • This bonus incorporates fees for product promotion services, logistics services, preparation, processing and packaging of products and the like.
  • Product promotion services have been re-defined to include: product advertising, product display, consumer demand study, preparation of reports with information on such products and other activities.
  • The maximum time for buyers to pay for products has been cut. For instance, products with a shelf-life of under 10 days have to be paid for within 8 business days; those with a shelf-life of 10 to 30 days – within 25 calendar days, products with a shelf-life of over 30 days, including alcohol – within 40 calendar days.

Currently, only conclusion of a contract that contravenes the Law on Trade is treated as an administrative offence. The amendments make performance and implementation of such a contract an administrative offence as well. This will make it easier to hold companies administratively liable.

Sanctions for legal entities breaching the Law on Trade consist in a fine of RUB 2 m to 5 m. Another innovation is a fine of RUB 3 m to 5 m for repeat breach of the Law on Trade.

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