The European Union has opened an antitrust case against Russia’s state -controlled Gazprom energy giant amid worsening relations between Brussels and Moscow.
EU Competition Commissioner Margrethe Vestager said
Wednesdaythat Gazprom’s behavior in central and eastern European member states, where it sometimes almost fully controls the gas market, amounts to an abuse of its dominant position.
Vestager said she is concerned that Gazprom imposes contractual obligations “preventing gas from flowing from certain Central Eastern European countries to others, hindering cross-border competition” and allowing the multinational to charge unfair prices.
“Gazprom is abusing is dominant position in eight EU eastern countries”, said Vestager. These are the three Baltic countries, Poland, Slovakia, the Czech Republic, Hungary and Bulgaria.
All of these countries have complained that Gazprom has charged them more for gas than numerous Western European states pay.
“Gazprom has adopted a strategy for partitioning the EU market country by country”, continued Vestager. “Some countries are charged higher prices than others, and some are bound by contract not to re-export the gas.”
Five countries, said Vestager (the three Baltic states, Poland and Bulgaria), pay unjustified high prices.
Western governments have long accused Russia of using Gazprom as a political tool to bully its neighbors and sow discord among EU members. Charges against Gazprom were ready last year but left aside due to concerns about further aggravating relations with Moscow following Russia’s military incursion into Ukraine.
Brussels and Washington have both imposed sanctions on Russian officials and companies in response to the Kremlin’s annexation of Ukraine’s Crimea territory and backing of separatists in eastern Ukraine.
EU antitrust chief Margrethe Vestager, who assumed her post in November, has denied that the Gazprom investigation is driven by politics.
The initial phase of the probe began in 2011 with raids of Gazprom offices in the EU member states that complained about the firm’s practices, and the formal investigation was launched in 2012.
After the EU formally launched the antitrust proceedings into Gazprom’s pricing practices in September 2012, Putin signed a decree requiring Russian strategic firms that operate abroad to obtain government permission before disclosing information to foreign regulators, changing contracts, or selling property abroad.
Gazprom is the dominant natural gas supplier in all Central and Eastern European countries, with market shares well above 50% in most, and in some countries up to 100%.
Article 102 TFEU prohibits the abuse of a dominant market position, which may affect trade between Member States. Implementation of this provision is defined in the Antitrust Regulation (Council Regulation (EC) No 1/2003), which can be applied by the Commission and by the national competition authorities of EU Member States.
A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them and the parties can reply in writing of the objections raised against them. The addressees can examine the documents in the Commission’s investigation file, reply in writing and request an oral hearing to present their comments before representatives of the Commission and national competition authorities. The Commission takes a final decision only after the parties have exercised their rights of defence.
There is no legal deadline for the Commission to complete antitrust inquiries into anticompetitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertaking concerned cooperates with the Commission and the exercise of the rights of defence.
Gazprom has 12 weeks to react to
Wednesday’sEU allegations. If no agreement is reached, however, the EU could impose fines of up to 10 % of Gazprom’s total sales.
Such penalties could prove costly for Gazprom at a time when Russia is already battling economic woes amid falling oil prices and Western sanctions.
http://www.neurope.eu/article/eu-targets-gazprom-for-unfair-market-practices/