Terminating a distributor over pricing can turn into a cartel case and a turnover fine from Russia’s FAS
A distributor lowers the retail price of an imported drug to match a competitor dealing in parallel imports, and the manufacturer immediately calls, asking to raise the price back up. Six months later, the contract with this distributor is terminated under the pretext of a commercial policy violation.
The formal ground for termination looks neutral: the distributor allegedly failed to comply with service standards. The real reason is different: Resale Price Maintenance (RPM). Part 2 of Article 11 of the Law on Protection of Competition explicitly prohibits it. The Federal Antimonopoly Service (FAS) qualifies such instances as concerted actions, pulls up messaging logs, and imposes turnover-based fines on the manufacturer.
In 2026, the risk for pharmaceutical companies increased across several fronts at once. The legalization of parallel imports and price disparities between EAEU countries altered traditional levers of retail price control, while new production localization rules created additional pretexts for pressuring distributors. At the same time, FAS extended its oversight to digital platform pricing algorithms.
How the Antimonopoly Authority’s Stance on Vertical Agreements Has Evolved
Prior to 2015, Russian law assessed almost any vertical agreement on price as a formal (per se) violation, regardless of the market shares held by the participants. Federal Law No. 275-FZ of 5 October 2015, known as the Fourth Antimonopoly Package, introduced a differentiated approach: agreements involving low market shares received formal exemptions from the ban.
The current version of Federal Law No. 135-FZ of 26 July 2006 «On Protection of Competition» (hereinafter, «Law No. 135-FZ») divides prohibitions into three tiers. Cartels between competitors under Part 1 of Article 11 are prohibited without exception. Vertical agreements under Part 2 of Article 11 are prohibited if they result in setting the resale price, unless the seller establishes only a maximum resale price for the buyer. Other agreements under Part 4 of Article 11 require proof of an actual restriction of competition; no per se ban applies to them.
RPM is implemented through direct and indirect mechanisms. FAS enforcement practice categorizes them by risk level.
Table 1. Resale price maintenance methods and antimonopoly risk levels
| Exposure method | Mechanism description | Risk level |
|---|---|---|
| Direct price fixing | Specific price stated in the contract or an addendum | Per se violation |
| Minimum price | Prohibition on selling the product below a set threshold | Per se violation |
| Trade margin fixing | Capping the distributor’s margin by a percentage | High |
| Indirect pressure | Discounts and bonuses conditional on keeping to a recommended price | High |
| Recommended price without sanctions | Price indicated as a benchmark, with no consequences for deviation | Low |
A per se violation in this table means the antimonopoly authority is not required to prove actual adverse market effects. Establishing the fact of price fixing is sufficient.
Economists have debated the harm of RPM longer than antimonopoly regulation itself has existed. Fixing the retail price suppresses competition among sellers of the same product, yet it can protect a distributor’s investment in staff training, demo halls, and after-sale service. Without a minimum price, a discounter free-rides on someone else’s marketing effort, offering the same drug cheaper and without service. Large pharmacy chains also use the threat of switching to a competitor to pressure a manufacturer into locking in a minimum price, protecting their own margin from more efficient rivals.
Russian enforcement practice rarely accepts these arguments as valid. Part 1 of Article 13 of Law No. 135-FZ formally allows such a defense if the agreement improves the product’s competitiveness or passes the benefit on to buyers. The evidentiary burden requires a detailed economic analysis, which is rarely conducted at the pre-trial stage. In practice, it is easier to restructure a commercial policy in advance than to prove a positive economic effect before a FAS panel afterward.
What Changed for Pharmaceutical Companies in 2025 and 2026
The pharmaceutical market is regulated within narrow product boundaries, typically defined by International Nonproprietary Name (INN). Under such narrow market definitions, the 20% market share threshold, on which the applicability of the Article 12 exemptions depends, is reached quickly, often by a single originator drug in one region alone.
Article 12 of the law provides three exemptions for vertical agreements, and they are not equally useful for protection against RPM risk. The first exemption covers commercial concession (franchise) agreements (Part 1). The second exempts agreements where the share of each participant in the relevant product market does not exceed 20% (Part 2). Both apply to resale price agreements under Part 2 of Article 11 and genuinely reduce the risk for small regional distributors.
The third exemption works differently, and this is where regulatory managers most often go wrong. Part 3 of Article 12 exempts agreements covered by Part 4 of Article 11 if the parties’ aggregate revenue does not exceed 800 million rubles. Part 4 of Article 11 concerns restrictions on competition unrelated to price. This exemption does not cover price fixing. A distributor’s small revenue does not shield a manufacturer from RPM risk if the agreement concerns price specifically.
The Fifth Antimonopoly Package, enacted by Federal Law No. 301-FZ of 10 July 2023, added Article 10.1 to the law. It extends the Article 10 prohibitions to digital platform owners when three conditions are met at once: network effects give the platform decisive market influence, the platform’s share of transactions exceeds 35% in monetary terms, and the platform owner’s annual revenue exceeds 2 billion rubles. For pharmaceutical marketplaces and pharmacy aggregators, this creates liability for algorithms that downgrade a product’s visibility when its price falls below the level recommended by the manufacturer.
Price-parity rules work in a similar way: a platform requires a pharmacy chain not to sell a product cheaper than on other channels. Here the restriction is imposed by the platform itself, bypassing the classic vertical-agreement structure between manufacturer and distributor. Economically, it is the same RPM mechanism, only applied to every seller on the platform at once.
In parallel, the logic of localization in public procurement has shifted. Government Resolution No. 1875 of 23 December 2024 replaced the former «third superfluous bidder» rule with a new national-treatment regime. For the list of strategically important medicines, the «second superfluous bidder» rule takes effect on 1 January 2026: a bid offering a full production cycle within the EAEU, including synthesis of the active pharmaceutical ingredient (API), disqualifies all competing bids for imported equivalents.
The Ministry of Industry and Trade originally planned to launch the mechanism as early as 1 September 2025. The deadline was postponed by Resolution No. 1326 of 29 August 2025, owing to the unreadiness of the strategically important medicines list and of the product-origin traceability system. Manufacturers using a Russian or Eurasian API additionally receive a 15% price preference when tender bids are evaluated.
Localization creates a fresh pretext for dictating prices. A manufacturer with a localized production cycle can require several formally independent distributors to submit tender bids at a coordinated price in order to keep the preference within the group of companies. The antimonopoly authority classifies such coordination as a cartel under Part 1 of Article 11. The penalty for a cartel is far harsher than for an ordinary vertical price agreement.
The legalization of parallel imports applies to the list of goods under Government Resolution No. 506 of 29 March 2022 and Ministry of Industry and Trade Order No. 1532 of 19 April 2022. Most registered medicinal products are not included in that list; for them, a separate mechanism for temporary import in foreign packaging under Resolution No. 1964 of 31 December 2024 continues to apply. Classic parallel import has little to do with this sector. The main source of RPM risk for pharmaceutical brands remains the price gap between EAEU member states. The Eurasian Economic Commission (EEC) acknowledged this imbalance in the Union’s pharmaceutical market in 2025 and proposed developing a model methodology for calculating ceiling prices to narrow it.
Why Terminating a Distributor Contract Is Rarely Safe
A manufacturer unhappy with a distributor’s pricing rarely puts an outright ban on discounting in writing. Instead, a formal pretext turns up: a storage-condition violation, late reporting, an insufficient purchase volume. Courts and the antimonopoly authority look first at the correspondence that preceded the break. The wording in the termination notice itself proves very little on its own.
If the sole real reason was non-compliance with unlawful pricing instructions, a court may reinstate the contract and order the manufacturer to compensate the resulting losses. A separate risk arises when a manufacturer terminates a contract at the request of other distributors unhappy with a competitor’s prices. Clause 5 of Part 1 of Article 11 of Law No. 135-FZ prohibits such a collective refusal to deal with a specific distributor; it is classified as a cartel between the manufacturer and the remaining partners.
For companies holding a dominant position in a narrow INN market, an additional restriction applies. Clause 5 of Part 1 of Article 10 of Law No. 135-FZ prohibits an economically unjustified refusal to enter into a contract with a buyer who meets objective selection criteria. Refusing to work with a distributor solely because of low prices does not meet that standard of justification.
Table 2. Regulatory environment for RPM in pharmaceutical distribution before and after 2025
| Parameter | Before | Now |
|---|---|---|
| Legal basis for the RPM prohibition | Only Part 2, Article 11 of Law No. 135-FZ | Additionally, Article 10.1 for digital platform owners |
| Localization in public procurement | «Third superfluous bidder» rule under the former Resolution No. 1289 | «Second superfluous bidder» rule for strategically important medicines from 1 January 2026, under Resolution No. 1875 |
| Preference for a full EAEU production cycle | Absent in this form | 15% when tender bids are evaluated |
| Regulation of drug imports outside the rightsholder’s channel | Only the temporary-import regime under Resolution No. 1964 | Resolution No. 1964 remains in force; a general parallel-import list under Order No. 1532 was added, excluding most medicines |
Action Plan for the Regulatory Manager
Audit the commercial policy. Remove clauses on mandatory retail prices from distribution agreements. Keep only a recommended price with no consequences for deviating from it.
Separate discounts from price. Check whether bonuses and retro-discounts are tied to compliance with the recommended retail price. If they are, rebuild the incentive scheme around purchase volume or payment terms instead.
Review sales team correspondence. Train staff not to use phrases like «raise the price» or «we’re unhappy with the discounting» in letters and messaging apps. FAS treats such messages as direct evidence of RPM.
Separate tender coordination from ordinary pricing policy. If several distributors with a localized API compete in the same public tenders, document in writing that each distributor sets its own bid price independently.
Put in place an internal antimonopoly compliance system. Article 9.1 of Law No. 135-FZ allows a company to submit its internal compliance policy to FAS for a preliminary review. This does not remove liability automatically, but a properly built compliance system reduces the fine if a violation is found.
Relationships with a distributor rarely break down over a single price. Termination is usually preceded by months of negotiation, discounts tied to the manufacturer’s price list, and growing frustration that cheaper parallel imports are eating into market share. Each of these steps looks like ordinary commercial practice on its own, but together they add up to a cartel case, one that FAS builds slowly, month by month.
Regulatory framework:
1. Government Resolution No. 1964 of 31 December 2024 «On the Temporary Procedure for Importing Medicinal Products in Foreign Packaging»
2. Federal Law No. 135-FZ of 26 July 2006 «On Protection of Competition» (as amended 31 July 2025)
3. Federal Law No. 275-FZ of 5 October 2015 (Fourth Antimonopoly Package)
4. Federal Law No. 301-FZ of 10 July 2023 (Fifth Antimonopoly Package)
5. Government Resolution No. 1875 of 23 December 2024 «On Measures to Grant National Treatment in Procurement»
6. Government Resolution No. 506 of 29 March 2022 «On Parallel Import»
7. Order of the Ministry of Industry and Trade of Russia No. 1532 of 19 April 2022