EU charges Gazprom of abusing its dominant position on the continent

Today’s European press report that Brussels has launched an investigation into Gazprom, which supplies 30% of all natural gas consumed in Europe, for abuse of dominant position. Released yesterday, the competition authority’s “statement of objections” accuses the Russian giant of dividing the European market by preventing the resale of gas for export.

Eight countries are concerned, namely Poland, the Czech Republic, Slovakia, Hungary, Bulgaria and the three Baltic States. Gazprom can therefore changes prices, with differences of up to 40%. An ARD programme notes that while the complaint against Gazprom was first formulated a year ago, a decision had been postponed to avoid adding further strain to negotiations over the Ukraine conflict. “Whatever its country of origin, a company which does business in the EU must comply with European rules,” stressed European Competition Commissioner Margrethe Vestager, quoted in Le Figaro.

The amount of the fine that Gazprom could receive varies depending on the sources. Lithuania’s BTV says that Russian analysts estimate it up to €2-4 billion while La Libre Belgique reports that it could reach €9 billion, i.e. 10% of Gazprom’s turnover. Slovenian media report on Gazprom’s statement, saying that it “expects the resolution of this situation in the framework of the agreement, previously reached between the government of the Russian Federation and the European Commission to find an acceptable solution to the antitrust investigation at an intergovernmental level.” Finland’s MTV 3 reports that Lithuania welcomed the EC’s decision by saying that the Kremlin-backed era of blackmail is coming to an end. Hungary and Slovakia, however, do not support a direct strike against Gazprom.

Many media say that Brussels’ move goes beyond competition rules, and is related to current political affairs, something that Ms Vestager rejected in an interview with Børsen by saying that for Brussels, “it is [only] a question of how contracts are designed.” In a guest article for Handelsblatt, Friedbert Pflüger criticises Ms Vestager’s decision, stressing that it will likely increase the tensions between the EU and Russia. Along the same lines, USA Today reports that the move is expected to please countries that have been pressing for the EU to crack down on Gazprom, but may be seen another step in an “economic war” with Russia.

A commentary for The WSJE says that it is the wrong way to fix the problems caused by European dependence on Russian energy. “Gazprom is the right opponent, but the EU has chosen the wrong weapon,” reads Die Presse’s editorial. The author, Jakob Zirm, writes that the European Commission’s reaction to these developments, using competition regulations, is far from ideal. In a more positive tone, Dagens Nyheter’s editorial says that EU bureaucracy cannot topple the Russian oligarchy, but it may well overtake Russia´s mafia methods. El Mundo’s leader writer stresses that whatever the outcome, Europe cannot “remain captive” of Russia’s gas supply blackmail.

Meanwhile, following the Google case and, now, the Gazprom issue, several media outlets – especially in France – provide comments on Ms Vestager’s personality. A portrait featured by Le Monde highlights that the EU Competition Commissioner has distanced herself from the strategy her predecessor Almunia and that she has shaken the European antitrust policy out of its lethargy. The same idea is expressed in Les Echos and in a Deutschlandfunk programme. Le Figaro also writes that Ms Vestager “is now recognised as the Iron Lady of the European Commission.” Berlingske Tidende notes that the Commissioner has been called “very brave” for having the nerve to open the case now while Hungary’s HVG calls her a “warrior spirit.”