Strangled By Red Tape

Yevgeny Volk / July 20, 2009

Under the excuse of fighting the economic crisis, the Russian government is stepping up regulation that could severely restrict business growth. Ostensibly to stem the tide of rising prices, the government has initiated a dramatic cap on grocery retail chains. The bill submitted to the State Duma bans chains with sales exceeding 1 billion rubles ($31 million) from buying or building any new stores if they control over 25 percent of the market in a city or a town.

Formally, this measure is designed to stop retailers from charging monopoly prices and seems to express concern for consumers. A close analysis shows, however, that the (more…)