EC invites Eastern European member states to weigh in on Gazprom anti-trust settlement proposal

Written by on March 13, 2017 in Bulgaria - Comments Off on EC invites Eastern European member states to weigh in on Gazprom anti-trust settlement proposal

The European Commission said on March 13 that it has asked eight Eastern European member states for comments on the list of commitments submitted by Gazprom to address the pending anti-trust investigation against the Russian state-owned natural gas monopolist.

EC’s call for comments from stakeholders comes nearly two years after its formal “statement of objections” identified Gazprom as hindering competition in the gas supply markets in eight European Union countries: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. That step was the result of an investigation that went on for several years.

Last year, Gazprom submitted a list of concessions to the EC, hoping to settle the anti-trust charges and avoid paying a fine, which can run up to 10 per cent of the company’s annual global turnover – which in Gazprom’s case could be billions of euro.

“We believe that Gazprom’s commitments will enable the free flow of gas in Central and Eastern Europe at competitive prices. They address our competition concerns and provide a forward looking solution in line with EU rules. In fact, they help to better integrate gas markets in the [Central and Eastern European] region,” the EU Commissioner in charge of competition policy Margrethe Vestager said in a statement.

The stakeholders will have seven weeks to submit their views on Gazprom’s list of commitments, at which point the EC will then take a final view as to whether the commitments were “a satisfactory way of addressing the Commission’s competition concerns.”

“If this is the case, the Commission may adopt a decision making the commitments legally binding on Gazprom, under Article 9 of the EU’s antitrust Regulation 1/2003. If a company breaks such commitments, the Commission can impose a fine of up to 10% of the company’s worldwide turnover, without having to prove an infringement of the EU antitrust rules,” the EC said.

Regarding Bulgaria, the EC’s main concerns were that Gazprom isolated the Bulgarian gas market and may have been charging excessively high prices in Bulgaria compared to Western European benchmarks, especially liquid gas hubs, given that the Russian firm is a dominant player on the Bulgarian upstream wholesale gas market.

The isolation of the Bulgarian gas market has been due in part to Gazprom’s territorial restrictions contained in its gas supply contracts with Central and Eastern European customers, the EC said. Following the initiation of the Commission’s antitrust proceedings, Gazprom has removed the explicit export ban from all its Bulgarian supply contracts that have not expired in the meantime.

Gazprom’s commitments provided a clear framework facilitating the free flow of gas across Bulgaria, and ensuring that Bulgarian customers could benefit from competitively priced gas now and in the future, according to the EC.

These commitments included a mechanism to ensure competitive prices in the Bulgarian gas market, removing market segmentation clauses to enable free flow of gas across Bulgaria’s borders, making changes to the relevant contractual provisions to enable cross-border flows of gas into Bulgaria, as well as a promise not to seek damages from its Bulgarian partners following the termination of the South Stream gas pipeline project, the EC said.

(Photo: gazprom.ru)

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