Monday

30th May 2016

EU officials take on Gazprom, Putin in price-gouge probe

  • Gazprom logo in Moscow (Photo: qwertyuiop)

The EU has said Russia's Gazprom might be guilty of price-fixing in Europe in a move set to test political relations.

The Europan Commission on Tuesday (4 September) said it has launched a probe into three "suspected" activities: hindering free flow of gas between EU countries; preventing diversification of gas supply; and imposing "unfair prices" on customers.

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Its case is based on documents snatched in dawn raids last September from 20 Gazprom and Gazprom subsidiary offices in 10 EU countries, including Austria, the Czech Republic, Germany and Poland.

Lithuania, which gets 100 percent of its gas from Russia, originally prompted the raids by a complaint to Brussels.

"I can confirm that we have asked the European Commission to look into possible abuse of the European competition rules over unfair pricing and I believe the probe is justified," its energy minister, Arvydas Sekmokas, told Lithuania's Baltic News Service on Tuesday.

A lawyer involved in two existing disputes on price-fixing between Gazprom and Lithuania and Gazprom and Poland at an international arbitration court in Stockholm told EUobserver: "They [the EU] might have a case ... Gazprom's [dominant] market position has been an issue for many years."

Gazprom has so far not reacted officially.

But its spokesman, Sergei Kupriyanov, told Reuters by phone: "Let them investigate."

The commission probe could take years to resolve. In theory, it could end with a 10 percent fine of the company's income in the markets where it is found guilty of wrongdoing - a figure in the billions of euros.

The commission's anti-trust department operates independently of its political masters in President Jose Manuel's Barroso's team, with Tuesday's statement underlining the technical nature of the case by citing chapter and verse of EU competition law.

A contact close to Gazprom told this website the matter "should not be politicised" and that "it wouldn't help at all" to try to influence the EU executive's decision.

But Gazprom has an arsenal of friends in high places to take its side.

Russian President Vladimir Putin himself warned Barroso at two recent summits not to use EU law to try to weaken the Russian state-owned firm's position in Europe.

Former German chancellor Gerhard Schroeder is on Gazprom's payroll.

It pays lobbying firm GPlus, run by former EU anti-trust official Peter Guilford, an estimated €2 million a year to plead its views in Brussels.

It also has purported links to Russian intelligence services.

A senior source in Belgium's intelligence service, the VSSE, which is responsible for protecting the EU institutions from foreign spies, told EUobserver that Russian espionage activity in the EU capital is at the same level as the Cold War, with a special focus on EU energy policy.

Another contact, a senior EU official, told this website in a separate interview: "It [Gazprom] is not a normal company in the European sense of the word."

Correction: The original story said a fine could be 10 percent of Gazprom's total turnover. In fact, it could be 10 percent of its income in the markets where it is judged to have misbehaved

Finance ministers baulk at tax-avoidance rules

Member states will discuss again in June a proposed directive to outlaw practices used by large companies to avoid paying taxes. Meanwhile, the European Parliament makes progress on its probe of Panama Papers.

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