On Thursday 24 May, the European Commission adopted a decision ordering the Russian gas giant, Gazprom, to comply with a number of obligations in order to preserve competition on the gas market in central and eastern Europe.
Accusing Gazprom of breaking EU competition law rules by abusing its dominant position in Central and Eastern Europe, the European Commission sent a statement of objections to the company on 22 April 2015 (see EUROPE 11300).
Following exchanges with the company, the institution today imposed obligations on it for a period of eight years to put an end to the practices it considers anti-competitive. “These obligations will significantly change the way Gazprom operates in Central and Eastern Europe, to the benefit of millions of European consumers when they heat their houses, when they cook their food and to the benefit of course also of European businesses which rely on gas for their production”, Margrethe Vestager, the Commissioner for Competition, told a press conference.
Among the measures imposed, the Commission has first of all ordered Gazprom to remove the restrictions preventing wholesalers from reselling the gas they buy from it and to modify contractual clauses on gas controls and statements in Bulgaria.
The Russian company must also allow flows of gas to or from certain isolated regions in Bulgaria and the Baltic states (Estonia, Latvia and Lithuania), by making proposals to clients which have taken out gas supply contracts in central and Eastern Europe for at least 18 months to transport gas to these regions. The price of these services must be fixed and transparent and while the customers will have the option to apply this mechanism flexibly, Gazprom may refuse this service only if it does not have the necessary transport capacity.
The institution has also ordered Gazprom not to take advantage of its dominant position concerning the control of or access to gas infrastructure.
Finally, the customers of the Russian giant may benefit from a mechanism to ensure that the price they pay corresponds to standard prices in Western Europe. They may in fact request reductions in gas prices if these differ significantly from the prices applied in Western Europe. If Gazprom does not respond favourably to their request within 120 days, customers will be able to appeal to an arbitration body requiring EU law to be applied.
“If Gazprom fails to comply with any of these obligations, the consequences can be serious (…). The case doesn't stop with today's decision”, Vestager said. Although no sanctions have been so far announced, any breach by Gazprom of the obligations listed above could earn it a fine of up to 10% of its global turnover.
When asked about the potential positive impact of this decision on energy relations between the EU and Russia, the Commission said that “this case is not about Russia. This is about European consumers and businesses”. (Original version in French by Lucas Tripoteau)