Brussels, 22/04/2015 (Agence Europe) - On Wednesday 22 April, the European Commission announced its decision to send a statement of objections to the Russian gas company Gazprom over its suspected abuse of dominant position.
A week after she sent a similar notification to the American online research giant Google, the Commissioner in charge of competition policy, Margrethe Vestager, explained that this was not a new strategy on the Commission's part, but “decisions made on a case-by-case basis, backed up by facts and not political considerations”.
Vestager said that she did not know why her predecessor, Joaquin Almunia, had made the decision, in September of last year, to suspend the discussions looking into the possibility of responding to the Commission's concerns via commitments on the part of Gazprom, as is provided for by the procedures of the European Executive (see EUROPE 11160). She explained that she had been in touch with senior Gazprom officials, but that no negotiations had been initiated. The statement of objections is a “clear means” of moving to a new phase of investigation. All options are open, Vestager stressed. “Yes, a negotiated solution could be found, but other solutions are also an option”, she explained.
Commission's objections. The Commission explains that Gazprom occupies a dominant position on the gas supply markets in several countries of central and eastern Europe, with a market share of considerably more than 50% in some cases, even of 100% for some of the countries. The Commission's preliminary analysis indicates that Gazprom hinders competition on the gas supply markets in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.
The Commission suspects Gazprom of having pursued a global strategy to close off the gas markets in Central and Eastern Europe, with a view to maintaining an unfair pricing policy in several member states of the region. It believes that Gazprom implements this strategy by practising unfair prices and by placing conditions on its gas provision involving securing separate commitments from the wholesalers as regards the gas transport infrastructure.
Gazprom has included a number of territorial restrictions in the supply contracts it has taken out with wholesalers, to prevent exports of gas to the eight states referred to above (clauses banning exports, destination clauses whereby the client is obliged to use the gas purchased in their own country, the obligation to obtain authorisation from Gazprom before carrying out any exports).
These territorial restrictions have a negative impact on gas prices, as they prevent cross-border gas flows and close off the market, the Commission stresses.
The investigation carried out by the European Executive concerned the prices paid by Gazprom's industrial clients and gas wholesalers. The Russian gas company links the price of natural gas to those of a number of oil products (practice of indexing on oil prices). The Commission's investigation aims to determine whether, and to what extent, the price levels practised in a given country are unfair.
On the basis of its analysis, the Commission reached the preliminary conclusion that Gazprom had practised unfair prices in Bulgaria, Estonia, Latvia, Lithuania and Poland.
Additionally, the Commission suspects Gazprom of having exploited its dominant position on the Bulgarian and Polish markets by making gas supply conditional on securing certain infrastructure commitments from the wholesalers.
On the Bulgarian market, the Commission's preliminary assessment is that Gazprom made its wholesale gas supply conditional on the participation of the Bulgarian incumbent wholesale gas supplier in a large-scale infrastructure project led by Gazprom (the South Stream gas pipeline project, which has since been abandoned), despite high costs and uncertain economic prospects.
On the Polish market, it believes that Gazprom made gas supply conditional on maintaining control over the investment conditions regarding the gas pipeline through Poland, Yamal.
Investigation underway since 2012. In October 2013, Commissioner Almunia announced that he was putting together a statement of objections against Gazprom (see EUROPE 10935). Once it was ready, it was never sent, as it failed to secure the blessing of the Commission President at the time, José Manuel Barroso. The investigation was opened in September 2012, following a complaint from Lithuania (see EUROPE 10682).
Objections unfounded, says Gazprom. The Russian gas company immediately reacted to Vestager's announcement, describing the Commission's objections as “unfounded”, and stating that this first stage of the investigation “does not amount to finding Gazprom guilty of violating any provision of EU law”.
“Gazprom strictly adheres to all the norms of international law and national legislation in the countries where the group conducts business. The business practices of the Gazprom Group in the EU market, including the principles of gas pricing, are in full conformity with the standards observed by other producers and exporters of natural gas”, Gazprom commented.
“We expect that within the framework of the ongoing anti-trust investigation our company's rights and legitimate interests, rooted both in EU legislation and international law, will be taken into consideration. We also expect that it will be duly noted that OAO Gazprom was established beyond the jurisdiction of the EU, and that it is empowered by the laws of Russian Federation with special socially-significant functions and has the status of a strategic government -controlled business entity”, the Russian gas company continued.
Gazprom states that it expects this dossier to be resolved in the framework of the agreement previously concluded between the Russian government and the Commission to find an acceptable solution, at inter-governmental level, to the anti-trust investigation being carried out by the European Executive. (Élodie Lamer and Emmanuel Hagry)