Objections to Gazprom for Alleged Abuse of Dominant Position

EU: Commission Sends Statement of Objections to Gazprom for Alleged Abuse of Dominant Position

On 22 April 2015 the European Commission sent a Statement of Objections to Gazprom informing it that some of its
business practices in Central and Eastern Europe may be deemed as breaching the EU competition law and,
particularly, as abusing its dominant position in the relevant market. The issuance of the Statement of Objections is a
result of an unofficial investigation conducted by the Commission in September 2011 in premises of undertakings active
in the supply, transmission and storage of natural gas in several Member States. Following the inspection, on 4
September 2012 the Commission announced the opening of formal proceedings against Gazprom pursuant to the
relevant antitrust provisions, concerning alleged abuse of its dominant position. The Statement of Objections refers to
business practices which Gazprom applies in eight Member States (Bulgaria, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland and Slovakia), in which it is the main supplier of natural gas, with market share exceeding 50%
(in some states even up to 100% of the relevant market).

According to the preliminary view of the Commission, Gazprom is breaching EU competition law by adopting an overall
strategy which leads to the partitioning of Central and Eastern European natural gas markets. Its anticompetitive
practices are divided into three main categories. The first one refers to several clauses Gazprom includes in its contracts
with wholesalers and certain industry customers in all the above Member States, such as export ban clauses, destination
clauses (according to which the customer must use the purchased natural gas only in a specific area), requesting
wholesalers to obtain Gazprom’s approval for exports or refusing to change the location to which natural gas should be
delivered under certain circumstances. Such clauses according to the Commission constitute territorial restrictions and
measures to partition the market and, as such, are considered as anticompetitive.

The second business practice preliminarily considered by the Commission to constitute abuse of dominant position is the
pricing policy Gazprom applies to Bulgaria, Estonia, Latvia, Lithuania and Poland. According to this policy, the price of
the natural gas Gazprom sells is linked to a number of oil products. Indexing a product’s price to oil (or other) products is
not considered per se illegal, however, in this particular case, it seems that this pricing method has largely favoured
Gazprom over its customers.


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