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The European Commission Demands Further Concessions form Gazprom

Since September 2011, the European Commission, which oversees EU corporate competition policy: antitrust, cartels, mergers, etc., undertook the largest anti-trust inspection in its history. The investigation was of Gazprom, a Russian natural gas conglomerate, which is majority owned by the government.

The 6-year anti-trust dispute is based off the allegation: Gazprom is breaking EU anti-trust rules through its pursuit of a strategy to partition Central and European gas markets and subsequently, to maintain an unfair pricing policy in said member states.

The Commission opened an official dispute based on the allegations that Gazprom had used its supply agreements to introduce restrictions on gas supply transited across borders, engaged in unfair pricing, and conditioning gas supply on control of gas-transit infrastructure.

During their most recent talks, the EC has concluded that Gazprom must make additional concessions or face a possible fine of 10% of their revenue.

Source: EitSong, GIE

Source: EitSong, GIE

In 2015, Gazprom came out publicly their desire to settle the dispute with the EC. Succeeding talks have been described as a “constructive atmosphere” by Gazprom officials. Since the settlement process began, considerable progress has been made in rectifying Gazprom’s energy market manipulation. The Russian energy company has conceded to policies that mitigate the likelihood of future unfair pricing policies and have guaranteed the revisal of contractual agreements that do not meet the EC’s fair market standards. Significantly, Gazprom has vowed to no longer monopolize gas-transit infrastructure across Eastern and Central Europe.

Currently, the European Commission is calling for Gazprom to submit an improved commitment proposal before the settlement process further progresses. An “improved commitment proposal” is potential plan of action, that is the subject of anti-trust investigations, to address the EC’s focus on substantive changes in corporate policy. The EC’s appeal for such a proposal from Gazprom is perhaps indicative of a mindset that Gazprom has not sufficiently addressed the Commission’s concern, or has yet to follow through on previous commitments.