Yesterday, Prime Minister Dmitry Medvedev hosted a meeting with food retail chains and producers on the proposed measures for controlling the industry. The key outcomes include Medvedev recognising that price controls are impossible and the decision to provide industry unions the opportunity to discuss amendments to the Retail Law with the respective ministries (they are to be submitted to the State Duma not later than September).
The outcomes of the meeting are positive for the Russian food retail sector. The comments on the price controls are in line with our expectations, as we viewed these measures as being inefficient in terms of capping food inflation while implying material threats to the assortment available across the country. The issue of regulating food prices and mark-ups is vital for chains and comments from the Prime Minister largely lift the uncertainty, in our view.
Among the discussed amendments are regulating the marketing services provided by retailers, greater regulatory responsibilities for the Federal Anti-Monopoly Service, fewer days for chains to consider suppliers' price revisions and operational fines. We also think it is positive that industry participants are to be more involved in discussions on amendments. There have been a number of attempts to submit amendments to the Retail Law, largely driven by initiatives from state officials. We note that the impact of the proposed changes depends on them being implemented, and the outlook on that is still unclear.