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Antitrust charges brought against Russian energy giant Gazprom

The European Commission (EC), the executive branch of the European Union, charged Russian energy giant Gazprom (ticker: OGZPY) with abusing its dominance in natural gas markets in Europe. The EC claims that Gazprom may be using its dominant market position in Europe to impose territorial restrictions, charge unfair pricing to some E.U. members and leverage its market position to obtain unrelated infrastructure commitments from some customers, according to the EC’s “Statement of Objections.”

According to the EC, Gazprom includes a number of territorial restrictions in supply agreements with wholesalers preventing the export of gas in eight E.U. member states (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia). The agreements include export ban clauses, destination clauses stipulating that the customer must use the gas in its own country, and other measures that include wholesalers obtaining Gazprom’s approval to export its gas to other locations.

The commission is also looking at Gazprom’s pricing structure to ensure that all E.U. members are receiving fair prices. In its preliminary conclusion, the EC charged Gazprom with charging unfair prices to five E.U. nations (Bulgaria, Estonia, Latvia, Lithuania and Poland).

The third major concern brought against Gazprom in the Statement of Objections is that Gazprom made gas supplies conditional upon obtaining certain infrastructure-related commitments, including participation in the now-halted South Stream project in Bulgaria, and control over investment decisions of the Yamal pipeline in Poland.

EC Antitrust Gazprom

Source: European Commission


More information about the EC’s Statement of Objection can be found in the commission’s fact sheet here.

Claims are ‘unsubstantiated’

Shortly after the EC published its Statement of Objections, Gazprom released a note calling the charges “unsubstantiated.”

“Gazprom strictly adheres to all the rules of international law and legislation in the countries where Gazprom Group operates,” read the note. “Operation of Gazprom Group on the E.U. market, including applicable principles of gas pricing, meets the standards that are used by other producers and exporters of gas.”

During a speech given Wednesday, European Commissioner for Competition Margrethe Vestager said Gazprom is an important energy partner for Europe, but concerns over the company’s practices should be explored. “Gazprom is a large, highly professional company, which is extremely important for Europe. The European Commission does not have a problem with Gazprom as a company but the European Commission has a problem with some of its commercial practices on the European gas market,” said Vestager.

Russian Foreign Minister Sergey Lavrov believes an agreement will be reached, reports Russian news agency Tass. “The argument is simple,” said Lavrov. “All the contracts, which Gazprom signed with its partners, were concluded in full compliance with the legal regime that existed in the E.U. at the time. When the Third Energy Package was adopted in the European Union, attempts were made to apply these requirements retroactively to the old contracts as well. This is absolutely inadmissible.”

Vestager has the power to order changes in companies’ business practices as well as levy fines of up to 10% of the their annual global turnover, reports The Moscow Times. A source in European institutions told Tass that fines may not be imposed if an agreement is reached, however. “If Gazprom and the European Commission find the way to change challenging business strategies of the company in Europe acceptable from standpoint of European norms, a penalty for the Russian gas holding may not be needed at all,” the source said.

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