The European Commission may be satisfied with the commitments made by Gazprom, which is accused of abuse of dominant position, but would first like to hear from the stakeholders before it makes a decision, the Commissioner responsible for the dossier, Margrethe Vestager, told a press conference on Monday 13 March. Two years after sending the Russian gas giant a statement of objections, the Commission is getting closer to a decision, in the framework of an investigation launched in 2012 following a complaint brought by Lithuania (see EUROPE 10682).
Its consultations on Gazprom's commitments will run until 4 May. If it officially approves them, they will be legally binding for eight years. Should Gazprom breach them, it risks a fine of up to 10% of its global turnover, without having to prove that there has been a violation.
In April 2015, the Commission explained that Gazprom occupied a dominant position on the gas supply markets of several countries of Central and Eastern Europe, with market shares of considerably above 50% and even as high as 100% in some cases. Its analysis was that the Russian gas company was blocking competition on the gas supply markets in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.
Commissioner Vestager explained on Monday that a commitment had been proposed by Gazprom for each of the three grounds for concern brought about by the company's behaviour. It feels that these proposals may adequately respond to its concerns.
The Commission's first concerns relates to the territorial restrictions imposed by the Russian gas company in the supply contracts concluded with wholesalers and certain industrial clients in Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Hungary and Slovakia. These restrictions block the free trade of gas in Central and Eastern Europe, according to the Commission. Gazprom proposes to remove all direct and indirect contractual restrictions that prevent its clients from reselling the gas they have bought from it across national borders. According to the Commissioner, Gazprom will also remove certain clauses from its contracts that provide an incentive for clients not to sell gas on, particularly those that provide for the Russian gas company to take some of the profit from the resale.
In order to facilitate interconnections of the markets with Bulgaria, Gazprom has also undertaken to modify its contracts regarding the monitoring and metering of gas in that member state. This will allow the Bulgarian operator of the gas transmission infrastructure to control flows of cross-border gas and will facilitate the conclusion of interconnection agreements between Bulgaria and its neighbours in the EU, in particular Greece.
Gazprom has also undertaken to grant the clients concerned from Hungary, Poland and Slovakia the option to ask for some or all of the contracted gas volumes to be delivered to entry points into the Baltic states and Bulgaria. This will allow the clients to seek new commercial outlets in the Baltic states and Bulgaria, even before the interconnection infrastructure is available. Gazprom will be authorised to apply a fixed and transparent service charge corresponding to what it generally invoices for this kind of service in the market.
In 2015, the Commission's second concern related to the fact that Gazprom practised unfair pricing in Bulgaria, Estonia, Latvia, Lithuania and Poland. On these markets, Gazprom has undertaken to bring in competitive reference prices, including Western European hub prices, into its price review clauses in contracts with customers in those member states. Gazprom will also practise more frequent price revisions.
Lastly, the Commission suspected the Russian gas company of having exploited its dominant position on the Bulgarian and Polish markets by making gas supplies conditional on securing certain infrastructure commitments from wholesalers. For the Bulgarian market, the Commission considered that Gazprom had made wholesale gas supplies conditional on the participation of the Bulgarian incumbent wholesale gas provider in a large-scale infrastructure project of Gazprom (the now defunct South Stream gas pipeline project), in spite of high costs and uncertain economic prospects. The Russian gas company has undertaken not to seek damages from its Bulgarian partners following the abandonment of the project, without prejudice as to whether these claims would have been valid.
For the Polish market, it believes that Gazprom made gas supply conditional on its retaining control over investment decisions concerning the transit gas pipeline in Poland, Yamal. On this point, the Commission's investigation showed that the situation cannot be changed by this anti-trust procedure, due to the impact of an intergovernmental agreement between Poland and Russia.
A political decision? When asked about her leniency towards the Russian gas company, in contrast with her decisions concerning American companies, Commissioner Vestager said that the law must be applied notwithstanding any political consideration. “This is law enforcement to make the market work, no matter the flag, the ownership of the size of the company”, she explained. Choosing to go down the binding commitments path does not rule out the possibility of a fine at a later date, she said, reiterating once again that if it fails to abide by these commitments, the financial penalty may be very high. (Original version in French by Élodie Lamer)