Commitments decision in Gazprom case challenging from procedural point of view

02.04.2014

The adoption of a commitments decision in the European Commission's (EC) Gazprom antitrust investigation looks challenging in light of the Ukrainian crisis, according to Alan Riley, a law professor at City University in London.

If Gazprom offers commitments, a survey would have to be distributed to all market participants, including the complainants, said Riley, speaking at an International Energy Law seminar held by the British Institute of International and Comparative Law on 1 April.

Lithuania would also have a say, noted Riley, reminding the audience that the country is currently investigating Gazprom's conduct while also being subject to economic blockade by the Russian Federation. Market testing the commitments may become an obstacle to an amicable conclusion of the case, he said, adding that this procedure may be challenging for Gazprom because complainers such as Lithuania are likely to make very high demands and accommodating them in the current political situation will be difficult.

The EC and US have imposed a variety of sanctions against Russia and those individuals involved in the Crimean crisis and are considering expanding these to coordinated sectoral sanctions.

Market testing will be considered not only by complainers but also by EC members (one vote per member), which in practice means that several countries may vote against a Gazprom settlement, said Vitaly Dianov, a senior competition lawyer at Goltsblat. This could hamper the process but will not be necessarily be an obstacle to accepting the proposed settlement, he added, noting that the EC normally tries to make consensus decisions.

In September 2012, Europe’s competition watchdog opened an investigation on suspicions that Gazprom might be abusing its dominant position by setting unfair prices for its customers in Central and Eastern Europe. The EC is also examining whether Gazprom restricts gas sales and the diversification of gas supply.

In February, EU Competition Commissioner Joaquin Almunia said the EC had almost finalised formal charges against the Russian giant, but remained open to commitments proposals, as reported by PaRR.

Currently, the EC is continuing to draft the statement of objections (SO) in the antitrust investigation into Gazprom, which will not be affected by the Ukraine crisis, as reported by PaRR.

EC not planning to politicise the case

"We are fully aware of the very important challenges regarding Europe's energy security," Almunia said today (2 April) at an antitrust press conference in Brussels. "The challenges did not start with the crisis in Crimea, but they have increased since the crisis."

"Our antitrust investigations are not politicised," continued the EU antitrust chief. "We neither adopt a more flexible nor a more strict approach in the current context. When we started the Gazprom investigation, the Russian government underlined the strategic importance of the energy sector for them."

The EU competition enforcer said the investigation focuses on the antitrust analysis. Almunia confirmed the EC is preparing formal charges but would not give any indications on the timeline of the case.

It is also important to consider whether in the context of Russia's isolationist mode, Gazprom cares to offer commitments to the EU, said Riley, adding that Gazprom may take a “we do not care, do your worst” approach.

Gazprom is planning to present its settlement proposal soon, said a person familiar with the situation.

After four months without any offer from Gazprom, the EC will have to present its SO at some point, Riley noted.

A prohibition decision by the EC would significantly damage Gazprom's reputation and hamper its potential future deals, said Riley.

Gazprom declined to comment on the commitments issue.

Authors of the article: Natalia Lapotko in London and Eleonora Wäktare in Brussels

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