The West launches economic attack on Gazprom

The European Commission has sent a Statement of Objections to Gazprom alleging that some of its business practices in Central and Eastern European gas markets constitute an abuse of its dominant market position in breach of EU antitrust rules.

Gazprom now has 12 weeks to reply to the Statement of Objections and can also request an oral hearing to present its arguments.

Economics are just a component of the West’s political campaign against Gazprom. Kyiv has backed the European Commission’s move and demands a joint antitrust inquiry into Gazprom’s activities on the Ukrainian market.

The European Commission points out that it will fully respect Gazprom's rights of defense and carefully consider its comments before taking a decision. Sending a Statement of Objections does not prejudge the final outcome of the investigation.

The only thing Gazprom has said in reply to date is that the objections are groundless.

The company points out that earlier Russia and the EU agreed to look for a mutually acceptable solution. So, the EC’s statement neglects Russia’s arguments on this matter even though the Russia-EU partnership and cooperation agreement obliges it to settle this situation through negotiations.

The investigation was launched in Sept 2012. Before the Ukrainian crisis the European Commission sought to settle that problem peacefully. But now, pushed by Washington and zeal for economic benefits, it is laying claims against Gazprom’s price policy in hope for change in contracts and cut in prices.

The European Commission's preliminary view is that Gazprom is breaking EU antitrust rules by pursuing an overall strategy to partition Central and Eastern European gas markets, for example by reducing its customers’ ability to resell the gas cross-border. This may have enabled Gazprom to charge unfair prices in certain Member States. Gazprom may also have abused its dominant market position by making the supply of gas dependent on obtaining unrelated commitments from wholesalers concerning gas transport infrastructure.

Experts warn that no matter what an outcome this process will have, it may take years. If the Europeans’ charges are confirmed, Gazprom may face a fine equal to 10% of its annual turnover in Europe, this making up approximately 1bn-4bn EUR.