Retailers have lifted restrictions on buying up the retail space of departed companies

Until next year, retail chains will be able to buy or lease the space of companies that have left RUSSIA,without looking back at antitrust restrictions on market share

On June 15, a new procedure for the purchase and lease of retail facilities and premises owned by foreign companies that left Russia came into force. President Vladimir Putin signed the law on this on June 11.

Under the current legislation, there were restrictions on the purchase and lease of additional space for retailers within the boundaries of one administrative-territorial entity. In particular, the share of the retail chain should not exceed 25% of the volume of all food products sold in monetary terms for the previous financial year within the boundaries of a constituent entity of Russia, including Moscow and St. Petersburg, within the boundaries of a municipal district, urban district.

The new law regulates transactions for the purchase and lease of retail facilities of companies that have left the Russian market, made from June 15 to December 31, 2022. For such transactions, restrictions provided by law will not apply. At the same time, the company that left Russia must meet several requirements: to be controlled by a foreign legal entity at the time of the transaction, and also to be a retailer who announced the termination of activities in Russia.

The entity must also stop working in Russia and have grounds for recognition as controlled by a foreign legal entity by June 15. If all these conditions are met, then Russian retail chains can acquire areas of companies that have left Russia without restrictions until the new year.

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After the start of a special military operation in Ukraine, a number of international retailers suspended the work of their stores in Russia. H&M (brands H&M, Cos, & Other Stories, Arket), Inditex (Zara, Massimo Dutti, Oysho, Pull & Bear, Bershka, Stradivarius), Uniqlo, IKEA and others have temporarily closed their stores. Starbucks, most McDonald's restaurants, some KFC and Pizza Hut outlets, and others have closed.

According to the Russian Council of Shopping Centers (RSTC), international brands that have stopped work account for about 20% of the space in shopping centers in Russia. Because of this, shopping centers may lose about 30% of revenue by the end of the year.

At the end of May, Prime Minister Mikhail Mishustin promised that the owners of shopping centers would have the right to early terminate lease agreements with companies from countries unfriendly to Russia.

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“Some foreign companies, suspending work for political reasons, are in no hurry to vacate the premises. Therefore, we are going to give owners the right to early terminate lease agreements with companies associated with unfriendly states,” the prime minister said at the time.