The EU commission completed its investigation on Gazprom and filed formal charges. The Russian gas giant is likely to pay 15 billion in fines and have its market policies limited. For many it is just another form of sanctions against Russia. Butthe stake could be even higher, involving the European Union’s cohesion.
The European Commissioner for Competition, the Dane Margrethe Vestager, in an interview with the Wall Street Journal, said”There is no political aspect in the proceedings against Gazprom nor the timing.” But the statement appears to contain an excusatio non petita. Referring to the timing, in fact, Vestager cited something that many already pointed out long ago.
The European Commission’s action against Gazprom for abuse of dominant position was opened more than two and a half years ago, in 2012. But nothing moved for long. Then, almost suddenly, the investigation of the case has seen a sharp acceleration in connection with the crisis in Ukraineand the annexation of Crimea. At the same time, ie, when Europe was issuing sanctions against Russia. The then Energy Commissioner, the GermanGunter Oettinger, gave a decisive boost to the case, making it ironclad from a possible dismissal, just before the end of his term.
What’s Gazprom’s fault?
“Gazprom is breaking EU antitrust rules by abusing its dominant position on EU gas markets. We find that it may have built artificial barriers preventing gas from flowing from certain Central Eastern European countries to others, hindering cross-border competition. Keeping national gas markets separate also allowed Gazprom to charge prices that we at this stage consider to be unfair,”wroteVestager in a statement.
According to the Europeanaccusations, it is for this reason that the Baltic countries are paying a price 20% higherthan the European average, Poland 14%, Bulgaria del’11% and the Czech Republic 10%. At the same time, Hungary and Slovakia pay about 10% less than the average of other European countries.
Gazprom, which owns all or part of the national distribution company and networks in many European countries, locked down the pipeline behaving as a monopolist. “If our concerns were confirmed, Gazprom would have to face the legal consequences of its behavior,” concluded Vestager.
Beyond the market aspect, it is no secret that the Kremlin uses Gazprom – a true Second State – as a weapon to bias the policies of some governments and, ultimately, to undermine the unity of European policy towards Russia. What seems at stake is, actually, the unity of the European Union.
Carrot and stick
And we return to the political dimension. “From now on it will be more difficult for the Kremlin to use Gazprom as a tool of political and economic blackmail in Europe,” said Dalia Grybauskaite, the president of Lithuania, the European leader with the toughest stance on Putin. Gazprom, for example, used the carrot-and-stickmethod with Hungary, Poland and Slovakia, three countries that reverse-flowed Russian gas to Ukraine, using their pipelines, amidstKyiv-Moscow gas dispute. By cutting supplies on the one hand suddenly, and by offering lower priceson the other, the Kremlin has managed to persuade them to step back.
The risk Gazprom run is not only related toa fine of up to € 15 billion, overall nothing serious, roughly a tenth of a year’s revenue. But ratherto thefact that it would be obliged to give up quotas and pieces of pipelines losing the opportunity to continue practicing his double standard method.
Ultimately, the answer to the question in the headline will be clear when the final decision is taken. Meanwhile, the most interesting clue seems to have arrived from Moscow. “We are hoping that a compromise will be found. Such issues should definitely be resolved through negotiations, and we are relying on an impartial attitude towards Gazprom,” said Vladimir Putin’s spokesperson, Dmitry Peskov. “As a shareholder in Gazprom, the Russian state will defend its interests.”
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The EU commission completed its investigation on Gazprom and filed formal charges. The Russian gas giant is likely to pay 15 billion in fines and have its market policies limited. For many it is just another form of sanctions against Russia. Butthe stake could be even higher, involving the European Union’s cohesion.
