New requirements announced for contracts between food suppliers and retail networks

Russia
Available languages: RU

On 9 December 2018 amendments* to the Law on Trade* come into force, establishing new restrictions and prohibitions between retail networks and food suppliers.

Among other things, the Law on Trade sets special requirements for food supply contracts, as well as special anti-monopoly rules on interactions between retail networks and suppliers.

The amendments aim at limiting the ability of retail networks to transfer any costs and losses to suppliers connected with the failure to sell food before the expiry date.

With the current wording of the Law on Trade, it is prohibited to impose a condition on a supplier where food that the retail network has not sold after a certain period of time must be returned.

The latest amendments to the Law on Trade establish stricter regulation in this area, specifically:

  • In relation to food with an expiry date of 30 days or less, it is absolutely prohibited to include a condition on returning the food to the supplier (or replacing or reimbursing the cost) in a contract.
  • For goods with an expiry date of more than 30 days, this condition is permissible, but only if it was not imposed on the supplier by the retail network.
  • Retail networks and suppliers are prohibited from negotiating a requirement where a supplier must reimburse the retail network’s costs related to the recycling or destruction of unsold food.

These new requirements and prohibitions apply to all suppliers and retail networks located in Russia, regardless of their revenue.

All commercial contracts between retail networks and food suppliers must be brought in line with the amendments no later than 6 June 2019. Therefore, retail networks and food suppliers should check all existing contracts to ensure compliance with the new regulations.

Violations of the above restrictions and prohibitions may lead to penalties of up to RUB 5m (EUR 66,050) per breach.

If you have any questions on the matters referred to in this Alert, please do not hesitate to contact CMS Russia experts Maxim Boulba and Elena Andrianova or your regular contact at CMS Russia.

* In Russian