Central and Eastern European gas markets: the European Commission invites comments on Gazprom commitments

The European Commission has published a press release on 13 March 2017 inviting comments on the commitments submitted by Gazprom in the case opened in April 2015 and which relates to the alleged anti-competitive behaviours on the Central and Eastern European gas markets.

 

In April 2015, the Commission sent a Statement of Objections to Gazprom, on the basis of a possible breach of EU antitrust rules on Central and Eastern European gas markets.

 

The Commission's concerns were related to the three following points:

• Gazprom may have partitionned the market along national borders, with territorial restrictions to re-selling gas;
• gas prices and lack of competitive gas markets;
• abuse of dominant position on the gas supply market to distort competition in the infrastructure market, such as gaining rights to access to or control gas infrastructures. Two projects were specifically identified: South Stream in Bulgaria and the Yamal Project in Poland. 

Today, the Commission is welcoming the proposed comments made by Gazprom (full document here) which it deems able to ensure that:

• restrictions to re-sell gas cross-border are removed once and for all in all contracts and facilitating such cross-border flow of gas in Central and Eastern European gas markets, within EU borders. This also includes the removal of all provisions in the contracts with customers that prohibit them from re-selling gas (e.g. clause securing Gazprom a share of the profit). This also include gas to Central and Easternal European based on a fixed transparent fee.
• gas prices in Central and Eastern Europea reflect competitive price benchmarks, by linking the two through e.g. liquid gas hubs.
• Gazprom cannot act on any advantages concerning gas infrastructure, which it obtained from customers by having leveraged its market position in gas supply. As to the two identified infrastructure projects, the Commission has obtained that Gazprom will not seek damages from Bulgarian partners in the South Stream Project; while no change can be made to the Yamal Project due to the existence of a bilateral Intergovernment Agreement between Poland and Russia.

Further details on the proposed commiments are referred to in the Commission's press release available here (IP/17/555). The Commissioner in charge of Competition, Margrethe Vestager, also prononced a separate speech at that occasion (Statement 17/590).

 

Stakeholders and all interested parties now have 7 weeks to send their comments on the proposed commitments (from the publication in the Official Journal of the EU).

 

Once the commitments agreed, they will become legally binding. This also means that if agreed, any breach will enable to Commission to impose a fine up to 10% of the company's worldwide turnover, without the need to prove an infringement of the EU rules on antitrust (see Microsoft case).

 

Legal basis: EU antitrust Regulation 1/2003, art. 9.

References:

- Antitrust case COMP/39.816

- Proposals for commitments, COMP/39.816 - Gazprom, full document

- Picture and graph: (c) European Union