EU versus Gazprom: An Antitrust Case

Written by | Monday, October 7th, 2013

The European Union is getting ready to sue the Russian gas monopoly in an antitrust case stating its ‘abusing monopoly position in Central and Eastern Europe’. If successful, the firm could be charged up to 10 percent of their annual revenues as a fine for breaching the EU antitrust laws, EU Competition Commissioner, Joaquin Almunia, said. In the case of Gazprom, the sum could reach up to 15 billion USD.
The case is expected to further deteriorate the already deteriorating EU’s relationship with Russia, as Moscow sees this step as the Union’s attempt to eliminate the position of Russian gas companies in Europe. Russia has a significant role in the European energy sector – it is the largest exporter of oil and natural gas to the EU. Some countries, such as Estonia, Finland, or Latvia, rely on Russian gas in 100 percent of their supplies and 10 out of 27 EU members import more than 50 percent of their gas from Russia. Lithuania, whose oil prices are the highest among the EU members, was the first to complain about possibly ‘unfair’ prices and is currently claiming about 1.4. billion EUR as a compensation in an international arbitrage in Stockholm.
The timing of the case is also unfortunate given the fact that the EU is trying to enhance trade ties with six former Soviet republics, mainly Ukraine. Moscow has therefore warned Kiev that it will raise its gas price if it signs the free-trade agreement with the EU. Interestingly, the possible monopoly-like manipulation with oil and gas prices is the main fear of the EU antitrust regulator. More precisely, Gazprom is suspected to have hindered the prices by linking the price of its gas to oil prices. The investigations have taken place in Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary and Bulgaria and the EU Commission is believed to file the case by the end of this year. Gazprom has refused to comment on the issue.

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