Grocery chains were forbidden to open new outlets if their share in the settlement is above 25%

Grocery store operator Pyaterochka (part of X5 Group) lost a case in the Supreme COURT on violation of the law on trade. We are talking about the Agrotorg company, which opened a new Pyaterochka outlet in the Moscow region, Kommersant reports. The Law on Trade prohibits grocery chains with a share of more than 25% in the settlement to open new stores there. On the basis of this norm, the FAS demanded that Agrotorg open another Pyaterochka in Orekhovo-Zuyevo in 2018 as illegal — at that time, the share of the network in the city was more than 25%.

Timeline of litigation

The lawsuit against Agrotorg was satisfied by the Arbitration Court near Moscow in the spring of 2021. At the same time, the appeal and the cassation considered that the closure of the Perekrestok store in Orekhovo-Zuyevo (also part of the X5 Group of Companies) is the basis for replacing it with a new Pyaterochka store. Later, the FAS referred the case to the Economic Collegium of the Supreme Court. They said that Perekrestok, which had been idle since 2016, did not affect the share of the retailer's revenue, and the new store could affect the increase in the share.

The opening of a new point, on the contrary, "created the prerequisites for increasing the share." According to the Supreme Court, the FAS's demands to terminate the contract may be denied in exceptional cases if the network proves that the acquisition of additional space "did not lead to an increase in the share of sales occupied by the group in the corresponding calendar year" and measures are taken to reduce the market share to an acceptable level . In this case, such exceptional circumstances have not been established by the courts, the Supreme Court noted. 

Consequences for grocery retailers

The Supreme Court broadly interpreted the norm of the law on trade, considering that replacing a non-working store with a working one can increase revenue in the local market. The Pyaterochka precedent created the conditions for possible difficulties with the opening of new grocery chain stores, Kommersant writes. Chain owners will need to justify why the new store does not disrupt competition. What mechanisms exist for this, is not reported.