Metro Cash & Carry’s contracts contradict trade law

3 June 2010 (12:56)

The contracts Metro Cash & Carry (Metro Group) has signed with its suppliers actually do not meet the regulations of the Trade Act that came into effect recently, the Russian Federation Federal Antimonopoly Service (FAS) reports. The FAS came to this conclusion after the chain store had been inspected upon its contractors’ numerous requests and complaints, Kommersant says.

The FAS organized the inspection in the beginning of 2010 after receiving a lot of complaints from Metro’s suppliers. The Service looked into the copies of the company’s supply agreements for 2008-2009. It was then revealed that the store used not only the wholesale discount but also a great number of other discount types, even though the Trade Act (effective since February 1) states that the wholesale discount is the only one a supplier can offer a chain store, and this discount cannot exceed 10% of the supplied goods’ cost.

Metro also turned out to include certain provisos on advertising and marketing in its supplier agreements. Under the contract, the chain store only became the official owner of the goods after receiving them on the premises of a store, which meant that it was not responsible for the goods that got spoilt or broken during transportation, the FAS reports.

Finally, Metro Cash & Carry imposed stricter sanctions on its suppliers than those the company itself would have to face in case of failing to meet its contractual obligations. Therefore, if all of the provisos of the new Trade Act had already come into force, the company would have violated over five Articles, says Kommersant.

The FAS Central Division’s Social Sphere & Trade Director Timofei Nizhegorodtsev refused to provide any comments on the issue; however, Metro Cash & Carry’s Corporate & Public Relations Director Oksana Tokareva did admit that the inspection findings were correct. Nevertheless, she believes no sanctions will be imposed on the company:

‘Article 22 (part 2) of the new law states that all the supplier agreements must be modified by July 30, 2010. Metro will make all the necessary changes before this deadline,’ Kommersant quotes Oksana Tokareva as saying.

Other materials on the topic::