Rules of game for trading market
In recent times, the behaviour of trading networks on the retail market has come under scrutiny. For quite a long time, nobody was troubled by the presence of large players but — as soon as businesses grew in scale — the issue of whether smaller outlets may be crowded out came into the limelight
By Yevgeny Velekhov
Interestingly, Belarus is one of many countries facing a similar dilemma, having to decide whether large retailers must be taken in hand or allowed to develop freely.
According to the Belarusian Statistical Committee, 392 markets operate in the country, with 19 specialising in food. In addition, 66 sell commodities and 12 animal and botanical goods. Most are of mixed character. There are 375 trading centres in Belarus, covering over 340,000 square metres.
Up to 80 percent of all consumer purchases are conducted through trading networks in EU states. Many are alarmed not because these shops sell too many products, ‘stealing’ profit from smaller stalls, but because of the terms they press on suppliers. Trading networks run strict policies regarding supply terms, which cannot be met by small and medium-sized suppliers. Prices are also set very much to the advantage of these major buyers.
A recent report by the CIS Executive Committee’s Interstate Council on Antimonopoly Policy clearly indicates that our CIS neighbours face similar problems. The share of large-scale trade in overall retail volumes is not huge in Belarus but it is growing annually by 2-5 percent (on average). However, it is worrying that the presence of hypermarkets may create problems for agricultural producers and food suppliers (who find themselves unable to meet supply terms). Needless to say, the presence of larger retailers can crowd out competition, leading ultimately to a rise in prices and, possibly, deterioration in the quality of products. ‘Traditional measures of anti-monopoly regulation enable competitive bodies to partially eliminate problems which appear on the retail trade market. The presence of evident problems in regulating retail trade and the prompt development of trading networks indicates the necessity of special research of this economic sector by CIS antimonopoly bodies’, reads the report.
Analysts advise that existing CIS legislation be amended to govern trading activity transparently, while eliminating unfair practice and pressure on counter-agents by trading networks and suppliers. It should remove excessive administrative barriers to trade and support small and medium-sized businesses in the field of food trade and production. Additionally, the Council recommends to activate the activity of competitive departments in regulating the retail trade sector. Belarusian legislation is already developing along this path, with a draft law on state regulation of trade and public catering currently being debated. It should be adopted later this year, featuring some new rules for retailers.