Gazprom Accused Of Abusing The Market Position
One of the biggest companies in the energy industry, the Russian Gazprom, has been accused by the market regulators of the European Union for overcharging for gas, and taking advantage of the dominant market position.
This is the result of a 2 yearlong investigation of the regulators, which issued a statement claiming that “It (Gazprom) may have built artificial barriers preventing gas from flowing from certain Central Eastern European countries to others, hindering cross-border competition.” The European Competition Commissioner Margrethe Vestager added that Gazprom is responsible for one third of the natural gas used in 28 European Union countries. Poland, Estonia, Lithuania, Latvia, Slovakia, the Czech Republic, Bulgaria and Hungary are the EU countries with Gazprom market domination ongoing investigations.
The problem is that Gazprom has individual contracts with each of the countries, and charges the natural gas at various prices. Vestager said that “Keeping national gas markets separate also allowed Gazprom to charge prices that we at this stage consider to be unfair.”
The gas prices are directly connected to the oil product prices, which results in different prices for different markets. The regulators clam that this “have unduly favored Gazprom over its customers.” Some countries have to pay and receive gas and oil that they might not need at the moment, but they have a ‘take-or-pay’ clause in the contract.
The Russian company released a statement stating that the accusations are completely unreasonable. “Gazprom considers the European Commission’s submitted claims baseless. At the same time, accepting the European Commission’s ‘Statement of Objections’ is just one phase of the anti-monopoly investigation, and does not mean that Gazprom is guilty of any violation of EU antitrust legislation,” the statement said. The Russian Federation is an important shareholder in the company, and has to defend its interest, said Dmitry Peskov, Putin’s press secretary, adding “We are hoping that a compromise will be found. Such issues should definitely be resolved through negotiations, and we are relying on an impartial attitude towards Gazprom.“