Russian government restricts trade in large cities

The new law about retail trade, approved by the Russian government this week, has arrived in the State Duma. The law forbids grocery retailers to open or lease new stores in Moscow, St Petersburg and other large cities, when their market share is higher than 25%. However, a new article has been added, which said that the law will apply also for all grocery retailers with annual turnover higher than RUB1 billion (USD32 million). The idea to introduce the RUB1 billion (USD32 million) cap came from the Cabinet, said Timofei Nizhegorodtsev, Chief of Social Issues and Retail Department at the Federal Anti-Monopoly Service. The Federal Anti-Monopoly Service only proposed the 25% restriction on market share in cities, towns and villages and their surrounding areas, known as “metropolitan districts” and “municipal areas”, he said. Such units comprise a central settlement and a number of smaller ones around them”. “This restriction could put a halt to the development of retail trade because RUB1 billion (USD32 million) in annual sales is standard for a chain of five to six stores,” X5 CEO Lev Khasis said in a statement. “The wording is so absurd that I hope the government will correct it to make it comply with common sense.”

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