European Commission & Russian Gazprom Reach Settlement

A European Commission official announced on Thursday that it had finally reached a settlement with Russian gas giant Gazprom, following a six-year antitrust investigation into whether the Russian state-controlled company had breached EU antitrust rules.

“Today's decision removes obstacles created by Gazprom, which stand in the way of the free flow of gas in Central and Eastern Europe,” said the European Commissioner for Competition, Margrethe Vestager.

An antitrust investigation into Gazprom was opened in 2012, when the company was in a dominant market position in Central and Eastern European natural gas markets. The Commission found that Gazprom breached EU antitrust rules by establishing territorial restrictions that include export bans and conditions requiring to use purchased gas in eight European countries, namely Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

“This strategy may have enabled Gazprom to charge higher gas prices in five of these member states (Bulgaria, Estonia, Latvia, Lithuania and Poland),” read in the statement. Although the Russian state-controlled company had rejected all accusations, calling them "unfounded", the company demonstrated its readiness for discussions and compromises.

"Gazprom strictly adheres to all the norms of international law and national legislation in the countries where the Gazprom Group conducts business," reads a company’s statement made in reply to the European Commission’s Statement of Objections, which was filed in 2015.

The recent settlement represents the end of long legal dispute.

Among the measures that Gazprom has accepted, the company will implement a set of obligations for next eight years, including removing any restrictions on customers’ reselling gas across borders; providing the Baltic States, whose gas markets remain isolated from the rest of Europe, with gas flows. Gazprom customers will have a right to demand lower prices level, competitive with Western European gas markets. In addition, Gazprom cannot act on any advantages concerning gas infrastructure, which it may have obtained from customers by having leveraged its market position in gas supply.

“These obligations will significantly change the way Gazprom operates in Central and Eastern Europe, to the benefit of millions of European consumers,” said Vestager.

The obligations are legally binding for Gazprom, and the Commission has the right to impose a fine of up to 10 percent of the company's worldwide turnover in case Gazprom breaks any of its obligations.

 “We are satisfied with the commitments decision announced today by the European Commission in relation to the settlement of the investigation,” said Gazprom’s Deputy Chairman of the Management Committee Alexander Medvedev.

“We were always committed to cooperate in good faith in order to find a constructive, mutually acceptable solution in accordance with the established procedure. We believe that today’s decision is the most reasonable outcome for the well-functioning of the entire European gas market,” Medvedev said.