Gazprom Faces EU Investigation for Anti-Competitive Trade Practices

By Michael Malpass

The European Commission (EC) opened an investigation Tuesday into whether the Russian gas company, Gazprom, had blocked fair competition in natural gas markets in Central and Eastern Europe. Gazprom holds a monopoly on exporting gas from Russia, and supplies about a quarter of Europe’s gas imports.

In a statement, the EC said it was investigating three suspected anti-competitive practices. According to the commission, Gazprom may have not only prevented the free flow of gas across EU Member States and the diversification of gas supply, but may have also linked the price of gas to oil prices, creating unfair prices for its customers.

Such behavior, according to the EC, would be in violation of Article 102 of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant position in order to affect trade between Member States. If found to be in violation, Gazprom could be fined as much as 10 percent of its global annual revenue.

The EC’s formal investigation of Gazprom comes after unannounced inspections of natural gas companies last September, including those affiliated with Gazprom. According to the EC, the companies inspected may have either been in engaged in anti-competitive practices – practices such as market partitioning, impeding network access and supply diversification, and excessive pricing – or had information about such practices.

According to the New York Times, Gazprom said during these inspections that its practices in foreign markets had always been in compliance with local regulations. A Gazprom representative could not be reached Tuesday evening for comment on the current investigation. According to the BBC, the company said: “Let them investigate.”