FAS has developed a methodology to evaluate increased demand and unreasonable prices

First Deputy Prime Minister Andrei Belousov ordered the development of FAS mechanisms in January 2024. Previously, the service presented him with a bill prohibiting the setting of economically unjustified prices.

From this document it follows that the price of a product is considered economically unjustified if within a period of 60 days it has increased by more than 5% of the consumer price index (December to December) of the corresponding year, provided that said increase is not due to economic factors.

FAS included factors such as a significant change in demand or supply of goods, regulated tariffs, prices of raw materials and components, seasonal or other factors. However, the document does not indicate what exactly is considered a significant change in demand, as well as the factors that influence the price increase.

What does FAS offer?

• It follows from the methodological recommendations that the price of a product that shows a stable deviation from its possible level on the market must be analyzed to determine its economic viability.
• In case of a significant change in demand, the department proposes to consider the excess of the volume of applications for the purchase of a certain product of a certain company over its offer by more than 10%, confirmed by documents within the month preceding the date of the price increase. Indicators that also allow us to talk about a significant increase in demand for goods are an increase in sales volumes, a reduction in product inventories in the warehouse and on the sales floor (taking into account the expiration date) , as well as the speed of sales.
• Unreasonable prices can be indicated indirectly by an increase in the cost of goods at a rate higher than the growth of the general consumer price index, taking into account changes in the volume of sales of goods, as well as real excess profitability about the industry. averages. A cost increase can be considered unfair even if the costs of production and sales remain at the same level or their increase does not correspond to the change in the price of the product.
• It is proposed to evaluate the economic justification of the increase in the price of goods taking into account the market segment (production, distribution, retail trade), the cost of the product, its type and other parameters. FAS proposes to take into account whether the product is consumer, premium or economy class.
• The antimonopoly service has also developed a specific formula for determining the reasonableness of the price. It is based on the relationship between the Rosstat consumer price index and the actual increase in cost.
• When assessing business expenses that influence price increases, the regulator proposes to conduct a “factor analysis” of costs, based on the basis4 of accounting and technical-operational accounting, as well as on the “price list” for three years .
• To determine seasonal factors, the FAS proposes to establish “systematic intra-annual price fluctuations” for individual goods. These fluctuations can be caused by “the pace of production processes, weather conditions, mass holiday periods and other events.” It is proposed to take into account other economic factors that entail higher costs for companies.