EU files antitrust case against Gazprom

BRUSSELS – European Union antitrust regulators have charged state-owned Russian gas giant Gazprom with abusing its dominant position in eight Central and Eastern European countries following more than two years of investigation. European Competition Commissioner Margrethe Vestager said in a statement on April 22, “We find that it [Gazprom] may have built artificial barriers preventing gas from flowing from certain Central, Eastern European countries to others, hindering cross-border competition.” In a statement on April 22, Gazprom rejected the EU charges and called them “unfounded.” It added that it “strictly adheres to all the norms of international law and national legislation” in the countries where it operates. Brussels has been probing three main accusations against Gazprom and found that the company imposes territorial restrictions in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia that include export bans and clauses requiring the purchased gas to be used in a specific territory. Brussels has also found that Gazprom used other measures to prevent its gas from flowing cross-border, such as obliging wholesalers in these countries to obtain the company’s agreement to export gas. The second EU finding concerns unfair pricing policy in the three Baltic states – as well as in Poland and Bulgaria – by linking the price of gas to that of oil. The third objection from Brussels concerns Gazprom’s activities in Poland and Bulgaria, in which gas supplies have been made dependent on investments in pipeline projects sponsored by Gazprom or by accepting that the company reinforce its control over a pipeline. Gazprom has 12 weeks to respond to the charges against it. The state-controlled Russian gas giant also has the right to call a hearing with EU competition officials in order to present its defense against the charges. It also can try to reach a settlement during that period of time, through negotiations with EU officials. If the issue is left unresolved, the EU Commission can levy fines of up to 10 percent of Gazprom’s overall sales, or order changes in the company’s business practices. In Kyiv, Ukraine’s state gas company, Naftohaz, welcomed the European Commission’s move, calling it “an important step in safeguarding European energy security.” A statement from Naftohaz on April 22 said it had “for years faced the detrimental effects of Gazprom’s dominant position in both EU and Ukrainian markets.” It also said: “At present, Gazprom is refusing to provide Naftohaz with shipping code pairs, which prevents the signing and implementation of interconnection agreements” that comply with EU energy regulations and that would allow reverse flows of gas pipeline deliveries “between Slovakia, Hungary, Poland and Romania on the one hand and Ukraine on the other.” (Rikard Jozwiak of RFE/RL, with additional reporting by Reuters and TASS)