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EU’s anti-monopoly case against Russia’s Gazprom nears settlement

Gazprom

Gazprom is hoping to avoid a fine under EU rules that could be up to $7.6 billion.  Company photo.

Gazprom accused of blocking rivals, overcharging customers

Oct 25 (Reuters) – Russia’s Gazprom and the European Commission are nearing a settlement deal relating to a five-year-old antitrust case against the gas producer.

The Russian state-controlled company is accused of overcharging customers and blocking rivals in eastern Europe, practices which the Commission says breach the bloc’s rules ensuring a level playing field.

Gazprom is seeking to avoid a fine, which under EU rules could be up to $7.6 billion, equal to 10 percent of its 2014 revenue, and settle the charges with concessions.

Gazprom Deputy Chief Executive Alexander Medvedev and European Competition Commissioner Margrethe Vestager are expected to reach a deal by the end of October, a source with knowledge of the matter told Reuters.

Gazprom supplies around a third of the European Union’s gas needs.

Here is a timeline of key events in the investigation:

2010/2011-Gazprom’s European utility customers incur large losses on purchases of Russian oil-indexed gas after having to resell the gas at a discount on continental spot markets.

Jan. 2011 – Lithuania complains about Gazprom’s tight grip over supply and distribution of gas to the European Commission.

Sept. 2011 – European Commission carries out raids on the offices of Gazprom, German utility E.ON Ruhrgas and RWE, Poland’s PGNiG, Austria’s OMV to investigate anti-competitive practices.

Jan. 2012 – Gazprom agrees to make price adjustments to its long-term supply contracts with France’s GDF Suez (now Engie), Germany’s Wingas, Slovakia’s SPP, Italy’s Sinergie Italiane, Austria’s Econgas.

Feb. 2012 – Polish utility PGNiG seeks arbitration in its gas pricing dispute with Gazprom.

Ph: 432-978-5096 Website: www.mapleleafmarketinginc.com

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Sept. 2012 – European Commission opens formal case against Gazprom to investigate potential abuses of its dominant position and unfair pricing by linking gas supply to oil prices.

Sept. 2012 – After ruling out a trade war over the European Commission’s Gazprom case, Russian President Vladimir Putin signs decree protecting strategic firms operating abroad, requiring them to obtain government permission to disclose information to foreign regulators, change contracts and sell property abroad.

Oct. 2012 – Lithuania sues Gazprom for $1.9 billion for overcharging on gas supplies between 2004-2012.

Nov. 2012 – Gazprom and Poland’s PGNiG reach agreement on gas prices, terminating arbitration proceedings.

2012 – Gazprom pays a total of $3.22 billion in rebates to European utility buyers of its oil-indexed gas.

June 2013 – Gazprom says will cut gas pipeline prices to European buyers in response to competition.

June 2013 – International arbitration court rules that Gazprom must include market pricing in the rates it charged Germany’s RWE and reimburse it for overpayments made by RWE.

Oct. 2013 – EU Competition Commissioner Joaquin Almunia says regulators preparing to charge Gazprom with abusing its dominant position in central and eastern Europe.

Jan. 2014 – Gazprom says it wants to settle the 17-month EU antitrust investigation but would resist pressure to change pricing practices in eastern Europe.

Feb. 2014 – Gazprom tells Lithuania it will implement EU energy market rules requiring it to sell off gas transmission assets there.

March 2014 – European Competition Commissioner Joaquin Almunia says seeks to insulate Gazprom anti-trust probe from Russia’s seizure and annexation of Crimea.

June 2014 – Gazprom sells off two Lithuanian gas distribution companies.

Sept. 2014 – EU’s Almunia says readying anti-trust charges against Gazprom after a two-year investigation.

April 2015 – European Commission charges the state-controlled company with abusing its dominant position and overcharging customers in Poland, Hungary and six other countries by up to 40 percent. Gazprom has 12 weeks to respond.

May 2015 – Gazprom considers offering Europe new concessions, including on pricing, to settle its antitrust case and avoid a long legal battle.

Aug. 2015 – Gazprom receives extension until end of September to reply to EU charges.

Sept. 2015 – Gazprom submits a proposal to the EU competition authority to settle case out-of-court, but makes no details public.

Sept. 2015 – Gazprom urges European Commission to continue talks in anti-trust case after sending a formal statement of objections to the executive body.

Nov. 2015 – EU antitrust chief Margrethe Vestager says not close to concluding case against Gazprom.

Dec. 2015 – EU’s Vestager and Gazprom’s deputy chief executive Alexander Medvedev meet and pledge to continue talks aimed at reaching a settlement.

March 2016 – Gazprom says it is moving towards a “mutually acceptable” solution in resolving the case.

June 2016 – Lithuania loses $1.9 billion lawsuit against Gazprom.

Oct. 2016 – Gazprom may be able to resolve the EU antitrust charges of abusing its market power in eastern Europe by the end of October as it enters the final phase of negotiations, a person familiar with the matter said.

(Reporting by Oleg Vukmanovic, editing by David Evans)

Ph: 432-978-5096 Website: www.mapleleafmarketinginc.com

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