Thursday

24th May 2018

EU competition authorities take on Gazprom

  • EU Competition commissioner detailed charges alledging that Russian energy giant Gazprom abused its dominant position in Europe (Photo: European commission)

The EU opened an anti-trust inquiry against Russian energy giant Gazprom on Wednesday (22 April), carefully presenting a politically sensitive issue as a simple competition case.

The European Commission sent a so-called statement of objections to Gazprom over three conducts breaking EU antitrust rules.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Gazprom said it considers the charges as unfounded. (Photo: Mitya Aleshkovsky)

"Our preliminary view alleges that Gazprom is abusing its dominant position" in eight EU countries, said EU Competition commissioner Margrethe Vestager at a press conference in Brussels.

Vestager took care to stress that the inquiry was the result of "a case that has been going on for quite some time" and not a consequence of tensions between Russia and the EU over the war in Ukraine.

The inquiry "is based on facts, interpretation of facts and evidence we have found", she said.

The case against Gazprom was opened following a complaint filed by Lithuania in 2011 and extended to seven other countries highly dependent on Russian gas, all former Soviet bloc countries.

The first charge is that Gazprom imposes territorial restrictions on Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

"These restrictions include export bans and clauses requiring the purchased gas to be used in a specific territory," said the commission in a statement.

Gazprom also obliges these countries to obtain its agreement to export gas, sometime preventing them to reselling it other countries.

The second charge brought by the commission is that Gazprom imposes unfair prices on five countries - Bulgaria, Estonia, Latvia, Lithuania and Poland.

The third charge alleges that in two countries - Poland and Bulgaria - Gazprom conditioned gas delivery to commitments on gas transport infrastructure.

"Gas supplies were made dependent on investments in a pipeline project promoted by Gazprom or accepting Gazprom reinforcing its control over a pipeline," the commission noted.

Gazprom now has twelve weeks to answer these charges.

"We are in contact with Gazprom leadership, but we have not initiated negotiations," Margrethe Vestager said.

"We will listen to their arguments and be open to more roads than one. A solution can be found in a negotiated manner but others solutions are also possible," she added, while refusing to comment on eventual sanctions or fine.

According to EU competition rules, Gazprom could face a fine up to 10% of its global turnover, between 10 and 15 billion euros.

With the Russian government owning more than 50 percent of Gazprom and with the company widely considered as an instrument to spread Russian influence in Europe, the issue is highly politicised.

The Gazprom case was formally opened in 2012, and took on further political ramifications with the war in Ukraine and the resulting EU sanctions against Russia.

Last autumn, the charges were ready to be published but the competition commissioner at the time, Joaquin Almunia, did not send them to Gazprom, prompting speculation that Brussels did not want to escalate tensions with Russia.

Asked about it, Vestager answered she did "not know the reasoning behind the decisions of my predecessor".

"We do not have an issue with the company, we have an issue with a conduct which ends up with unfair prices," she said, stressing the fact that other cases were brought against other energy or state-owned companies in Europe.

She said that Gazprom is "very professional, very large, very impressive, of great importance to some EU countries".

Gazprom - 'strategic entity'

The mild tone was met however with a more political reaction from Russia.

Gazprom said in a statement it "considers the objections put forward by the European Commission to be unfounded".

The company also reminded that "it is empowered by the laws of the Russian Federation with special socially-significant functions and has the status of a strategic government-controlled business entity".

The EU move also prompted a strong reaction from Russian Foreign affairs ministers Sergei Lavrov.

"That is absolutely unacceptable," he said on Russian radio

"After the EU adopted the so-called third energy package ... there have been attempts, and they continue now, to retrospectively, retroactively apply those requirements to old contracts as well."

EU seeks oversight powers on energy security

The European Commission wants to vet all major new gas deals with non-EU suppliers under extra powers unveiled on Tuesday to prevent a major supply crisis.

Magazine

Bioeconomy is a win-win strategy for Finland

"The big problem in the world today is a lack of resources and a lack of bio-diversity," says Finnish environment minister Kimmo Tiilikainen. His country plans to produce what the world needs the most.

Merkel: Nord Stream 2 is 'political'

Germany has for the first time acknowledged concerns on the "political" and "strategic" aspects of Russia's Nord Stream 2 gas pipeline.

News in Brief

  1. Gazprom accepts EU conditions on gas supplies
  2. Facebook tells MEPs: non-users are not profiled
  3. Commission proposes ending France deficit procedure
  4. UK households hit with Brexit income loss
  5. Report: EU faces 10% cut in steel exports to US
  6. Australia wants more access to EU agricultural market
  7. CV of Italian PM candidate under scrutiny
  8. Puigdemont Spain extradition rejected by German court

Stakeholders' Highlights

  1. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  2. Centre Maurits Coppieters“Peace and reconciliation is a process that takes decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  3. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  4. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  5. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  6. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  7. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  8. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  9. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  10. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  11. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach
  12. Sustainable Energy Week 2018"Lead the Clean Energy Transition"- Register and Join Us in Brussels from 5 to 7 May

Latest News

  1. GDPR does not (yet) give right to global oblivion
  2. Privacy Shield less relevant given GDPR, says data chief
  3. Unknown academic to lead Italy into EU clash
  4. 'Killer robot' projects eligible for EU defence fund
  5. Funding for European values needs radical changes
  6. Feeble EU format deflates Zuckerberg 'hearing'
  7. Are EU data watchdogs staffed for GDPR?
  8. EU pessimistic on permanent US trade exemption

Stakeholders' Highlights

  1. EU Green Week 2018Green Cities for a Greener Future. Join the Debate in Brussels from 22 to 24 May
  2. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  3. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  4. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  5. Mission of China to the EUProgress on China-EU Cooperation
  6. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  7. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  8. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  9. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  10. UNICEFCalls for the Protection of Children in the Gaza Strip
  11. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  12. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight