According to Kommersant, the Federal Antimonopoly Service (FAS) has proposed amendments to Russian Retail Law. The key changes assume a material tightening of the regulations, as well as assigning monopoly status to retail chains. The agency is asking to be granted the opportunity to investigate cases of potential Retail Law violations without the producer complaints, and wants to eliminate all supplementary services by retail chains from agreements between the retailers and producers.
The proposed amendments pose certain threats for retailers' profitability. However, the amendments have been submitted for public hearings only, and the outlook on any final document is vague. We do not see material downside risks to our short- to medium-term financial forecasts. However, such a hawkish stance from the FAS is downbeat for the industry’s long term prospects.
Maria Kolbina, Ivan Kushch, Nikolay Kovalev
VTB Capital analyst
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