COMPETITION LAW NEWS: EU Commission against Gazprom for alleged breach of its dominant position


After having opened formal proceedings on August 31st 2012, the European Commission has recently issued a Statement of Objections to Gazprom, which is deemed to be a dominant gas supplier in a number of Central and Eastern European countries with a market share between fifty per centum [50%] to one hundred per centum [100%], alleging that some of its business practices in Central and Eastern European gas markets are hindering competition in eight Member States – they being Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia – and consequently, could constitute an abuse of its dominant market position in breach of EU competition law and regulations.

Gazprom now has twelve [12] weeks to file its reply to the above-mentioned Statement of Objections and may also make a request for an oral hearing to present its submissions.

In its preliminary investigation, the EU Commission considered that Gazprom is deemed to be behaving in breach of Article 102 TFEU which prohibits the abuse of a dominant market position which may affect  between Member States, by following an overall strategy to create territorial restrictions within the Central and Eastern European gas markets, by for example, reducing its customers’ ability to resell the gas cross-border.

Ms Margrethe Vestager, EU Commissioner responsible for competition, is reported to have remarked that: “Gas is an essential commodity in our daily life: it heats our homes, we use it for cooking and to produce electricity. Maintaining fair competition in European gas markets is therefore of utmost importance. All companies that operate in the European market – no matter if they are European or not – have to play by our EU rules … We find that it may have built artificial barriers preventing gas from flowing from certain Central Eastern European countries to others, hindering cross-border competition. Keeping national gas markets separate also allowed Gazprom to charge prices that we at this stage consider to be unfair. If our concerns were confirmed, Gazprom would have to face the legal consequences of its behaviour.