Wednesday, September 05, 2012

Gazprom probed by EU over alleged unfair competition

Russia’s gas major Gazprom faces a probe of the European Union over alleged violations of fair competition in the natural gas markets of Central and Eastern Europe.
­The European Commission said it would investigate if Gazprom was hindering the free flow of gas across the EU countries, preventing supply diversification and limiting customer choice of delivery points. The company is also suspected of imposing unfair prices on its customers by linking the price of gas to oil prices.

“Such behavior, if established, may constitute a restriction of competition and lead to higher prices and deterioration of security of supply,” the European Commission said in a statement. “Ultimately, such behavior would harm EU consumers,” it added
If found guilty of violating EU competition rules Gazprom could be fined as much as 10% of annual revenue, or US$1.1-1.4 billion. Gazprom is yet to comment the issue.
European regulators said the probe will look at Gazprom's sales practices in eight European countries including Bulgaria, Estonia, Latvia, Lithuania, Slovakia and others. Russia supplies as much 36% of the EU's natural gas it also accounts for 82% of Poland's gas, 83% for Hungary and 69% for the Czech Republic.
The formal investigation was launched after the European antitrust authorities raided gas companies across Europe, including RWE, E.ON’s Ruhrgas and Hungary units, OMV AG (OMV), last September to uncover information on prices and supplies.
Meanwhile Lithuania’s government last year asked the EU to investigate Gazprom for refusing to cut gas prices. “I can confirm that we have asked the European Commission to look into possible abuse of the European competition rules over unfair pricing and I believe the probe is justified,” Energy Minister Arvydas Sekmokas was quoted as saying by the Baltic News Service.
The EU has been trying to diversify its gas supply after disputes involving Russia and Ukraine – a key transit country for Russian gas to Europe – led to supply disruptions last winter. In a separate move last year, EU authorities adopted new polices such as separating energy production from distribution, aimed at reducing Gazprom’s presence in the market.
The new policy – the so-called third energy package – was criticized by Russian authorities and experts, who say it will increase uncertainty in the European energy market.
Gazprom said it is considering lobbying the European Commission to get an exemption from the third energy package.

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