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A new draft law on trade forces retailers to build new stores themselves, rather than rent them
09.09.2011 2610

A new draft law on trade forces retailers to build new stores themselves, rather than rent them

The Federal Antimonopoly Service (FAS) has presented a second draft of amendments to the Law on Trade, which states that retail chains will be able to increase their share in the region to more than 25% only through the construction of new retail facilities. Lease of premises, according to the FAS, is not "organic growth" - too often M&A deals are masked this way.

In the first draft amendment to the law “On Trade”, the FAS prohibited any expansion of the trading network if it increased the share of the retailer in the trading entity by more than 25%. Then the project had enough opponents, and it was sent for revision. New amendments are considered “softer”: according to the new project, if the company does not have 25%, then it “has the right to carry out the construction of new retail facilities”, even if with their commissioning its share exceeds 25%. 

Most market participants, however, do not see much difference in the new text of the project. In addition, such amendments are opposed by the ministries of economy and industrial trade. The fact is that more than half of new stores are opened on a rental basis, while foreign operators in the format of hyper-supermarkets conduct their own construction.

The Kommersant newspaper quotes Ilya Belonovsky, the executive director of the association of retail companies, that retail is confused by the norms regarding development through rent. “The aim of the amendment is to prohibit M&A transactions that can lead to an increase in market share over 25%, and to allow calm organic development. But the FAS wants to prescribe this in the law in such a way that the main driver of growth for retail - rent - will not be included in the concept of "organic", that is, the implementation of the amendment in practice will be impossible ", - he will explain and hopes that the wording in the end is still will change. Writes the shopandmall website.

The Federal Antimonopoly Service (FAS) presented the second draft amendments to the law "On Trade", which states that retail chains will be able to increase their share in the region ...
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