Kommersant reports that MinEconomy plans to amend some articles in the Retail Law. They relate to the 10% maximum bonuses from suppliers and the 25% threshhold on the local markets controlled by one player. According to the Ministry, retailers get more than 10% of bonuses as they mask them under other items, such as services, while setting a threshold is negative for the competition between companies. The proposed timing of the amendments is 1 July.
We are positive on the potential cancellation of market share limits as it ensures equal rights for all market players. Apart from that, there is a lack of proper information on the market size as a significant proportion of market players lack cash desks (like open markets) or do not properly reflect their trading volumes.
With regards to the bonuses, we think that the recent strong gross margin expansion reported by public companies was a key trigger for the proposed amendment. Were the Minister to find that companies had been using such schemes and ban them in the future, the reported gross margin levels might not be repeated. This would have a negative effect on the gross margin, but we still see room in SG&A costs that could help to offset this negative development and support EBITDA.