Gazprom Attempts to Settle EU Antitrust Case (Sept 21st 2015)


BRUSSELS—OAO Gazprom on Monday said it has submitted proposals to the European Commission to settle accusations that the Russian energy giant hindered competition and charged unfair prices in several Eastern European countries.

If accepted, a settlement could help the company avoid billion-dollar fines, but would likely require it to fundamentally change the way it has done business in its former backyard since the collapse of the Soviet Union.

The commission in April filed formal charges against Gazprom, saying the state-controlled company broke European Union antitrust law in eight countries where it is the dominant gas supplier—Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. The commission, which acts as the European Union’s antitrust watchdog, said restrictive terms in Gazprom contracts forced territorial constraints on customers, for instance by prohibiting them from re-exporting gas to another country.


It also objected to Gazprom’s practice of tying the price of gas to that of oil, saying that had led to higher gas prices in Bulgaria, Estonia, Latvia, Lithuania and Poland than those charged in other markets. In addition, the commission said that in Bulgaria and Poland the company had also linked the supply of gas to government support for big pipeline projects such as the Yamal-Europe pipeline and the now-canceled South Stream project.

Gazprom has consistently rejected the charges as politically motivated; a claim the commission has denied. In recent months in particular the company has pointed out that customers whose contracts are tied to the price of oil are now enjoying exceptionally cheap gas because of the collapse in global oil prices.

While Gazprom has denied any wrongdoing, its management has said it was open to a settlement.

“We hope to discuss this proposal with the representatives of the commission in the near future in order to come to a settlement agreement,” it said Monday, without giving details on the content of its proposals.


The commission confirmed that it received the proposal, but added it still expected a formal response from the company on its charges by Sept. 28 2015.

Monday’s offer isn’t the first attempt by the two sides to resolve the case. Talks between Gazprom and the commission on settling the two aspects of the investigations that don’t include the oil-price link had advanced quite far by early 2014, people familiar with the probe have said. However, settlement negotiations collapsed in the spring of last year as the conflict between Russia and Ukraine escalated.

A year later, the EU’s new Competition Commissioner Margrethe Vestager filed the charges.

Analysts said on Monday that it was too early to say whether settlement talks would be successful this time around.

Ms. Vestager “has shown a very strong determination to move some cases forward,” said Alec Burnside, an antitrust lawyer at Cadwalader, Wickersham & Taft LLP in Brussels who isn’t involved in the case.

Within six months of taking office last November, the former Danish economy minister had jump-started several long-dormant cases, notably by filing charges against Gazprom and Google Inc. in a single week in April.


She has also taken a tough approach to mergers that might harm consumers, pushing Scandinavian telecom operators Telenor ASA and TeliaSonera AB to abandon the merger of their Danish operations this month.

The EU’s immediate response on Monday indicates that while the EU is willing to engage in settlement talks, regulators aren’t “taking their foot off the pedal,” Mr. Burnside said.

“This is a high-stakes game and it’s difficult to separate out antitrust from geopolitical elements, which are no doubt involved,” Mr. Burnside said.

Write to Gabriele Steinhauser at and Tom Fairless



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