EU Charges Gazprom With 'Abusing' Market Position

EU Charges Gazprom With 'Abusing' Market PositionEU Charges Gazprom With 'Abusing' Market Position

Russia’s biggest gas utility, Gazprom, was hit with an antitrust case by European Union regulators for “abusing” its dominant position and overcharging customers for gas supplies, RT reported.

We find that it (Gazprom) may have built artificial barriers preventing gas from flowing from certain Central Eastern European countries to others, hindering cross-border competition," European Competition Commissioner Margrethe Vestager said in a statement.

The investigation against the Gazprom has been ongoing for 2 years."Gazprom, with annual sales of some $100 billion, supplies about 30 percent of the natural gas used by the 28 countries of the EU.

The Russian gas major has individual contracts with Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, and Bulgaria allowing the company to charge each a different price for gas supplies.

"Keeping national gas markets separate also allowed Gazprom to charge prices that we at this stage consider to be unfair," Vestager said.

Gazprom responded to the accusations, and said that it considers the claim against the company "unreasonable" and "baseless." The gas supplier has 12 weeks to respond to the claim and call a hearing. EU antitrust fines cannot exceed 10 percent of global yearly revenue, which for Gazprom in 2013 was $164.62 billion, so the EU could hit the company with a more than $16 billion fine.

With several of its clients, Gazprom has a ‘take-or-pay’ clause, which forces customers to pay for deliveries they may not necessarily need or use. The company also links the price of gas to the price of oil.

The EU has been discussing the creation of an ‘energy union’ which would force companies like Gazprom to sell gas supplies at a fixed rate to the entire 28-nation bloc.

The European Union first launched an investigation into Gazprom in 2012, blaming Russia’s biggest gas producer for anti-competitive practices in Central and Eastern Europe. It said Gazprom was hindering the free flow of gas to member nations, preventing the diversification of gas supplies, and imposing unfair prices on customers by linking the price of gas to oil prices.

The antitrust case against Gazprom comes just days after the commission launched a similar case against American search supremo Google for abusing its dominance in the European market.