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E.U. Charges Russian Energy Giant Gazprom With Abusing Its Dominance
By JAMES KANTERAPRIL 22, 2015
Photo
A Gazprom Neft petrol station near the company's headquarters in Moscow. Russia supplies about one-third of the European Union’s natural gas.CreditMaxim Zmeyev/Reuters
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E.U. Charges Russian Energy Giant Gazprom With Abusing Its Dominance
By JAMES KANTERAPRIL 22, 2015
Photo
A Gazprom Neft petrol station near the company's headquarters in Moscow. Russia supplies about one-third of the European Union’s natural gas.CreditMaxim Zmeyev/Reuters
Continue reading the main storyShare This Page
- Gazprom with abusing its dominance in natural gasmarkets, a move amounting to a direct challenge to the authorities in Moscow.
The European Commission, the European Union’s executive arm, said that unfair pricing might have resulted in higher gas prices in Bulgaria, Estonia, Latvia, Lithuania and Poland, which have long been wholly or substantially dependent on Russian gas. In those countries, the commission said, Gazprom was suspected of charging wholesalers prices that were significantly higher compared with the company’s costs or to benchmark prices.
The commission said it suspected Gazprom of quashing competition by restricting gas flows to some parts of Europe. The commission said that its “preliminary view is that Gazprom is breaking E.U. antitrust rules by pursuing an overall strategy to partition Central and Eastern European gas markets, for example by reducing its customers’ ability to resell the gas cross-border.”
The commission also said that Gazprom might have been leveraging its dominant market position in Bulgaria and Poland by making supplies of gas conditional on those countries’ participating in infrastructure plans such as building a new pipeline route to Europe under the Black Sea.
“Keeping national gas markets separate also allowed Gazprom to charge prices that we, at this stage, consider to be unfair,” said Margrethe Vestager, the European Union’s competition commissioner.
“If our concerns were confirmed, Gazprom would have to face the legal consequences of its behavior,” she said.
Russia supplies about one-third of the European Union’s natural gas.
Gazprom said in a statement that it “considers the objections put forward by the European Commission to be unfounded.”
The company added that it “strictly adheres to all the norms of international law and national legislation” and that its pricing policies “are in full conformity with the standards observed by other producers and exporters of natural gas.”
The regulators’ move is a frontal challenge to President Vladimir V. Putin’s economic and geopolitical strategy by potentially limiting Russia’s ability to set prices favoring some customers and penalizing others.
On Wednesday, Gazprom reiterated that it was closely tied to the Russian state, and “established beyond the jurisdiction of the E.U.” The company added that it had been “empowered by the laws of the Russian Federation with special socially significant functions and has the status of a strategic government-controlled business entity.”
The charges make it more likely that Gazprom could eventually face a fine theoretically running higher than 10 billion euros, or about $10.7 billion. But the larger worry for Gazprom is the prospect of being forced to allow more competition in markets it has long controlled.
“The decision is a strong signal to consumers and the market that rules apply to everyone,” said President Dalia Grybauskaite of Lithuania, which is the country that called most vigorously for formal charges.
“The era of Kremlin-backed political and economic blackmail draws to a close,” said Ms. Grybauskaite, who also called for “swift and conclusive” results in the case.
The charges represent the second major move in a week by Ms. Vestager, who has sought to reinvigorate antitrust enforcement in Europe since taking office six months ago. Last Wednesday, she filed formal chargesaccusing Google of abusing its dominance in the market for online search in Europe.
http://www.nytimes.com/2015/04/23/b..._id&bicmst=1409232722000&bicmet=1419773522000
