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Gazprom Clinches Deal In Lengthy EU Antitrust Case, Avoids Fine

EU Competition Commissioner Margrethe Vestager speaks to reporters at EU headquarters in Brussels on May 24.

Russian state-owned energy firm Gazprom has reached an agreement with EU regulators, avoiding fines in an antitrust case that has dragged on for seven years.

The European Commission said in a May 24 statement that Gazprom will have to abide by a set of “obligations” imposed by the commission that will enable the free flow of gas and competitive pricing in Central and Eastern Europe, where the Russian energy giant is a dominant gas supplier.

“These obligations will significantly change the way Gazprom operates in Central and Eastern Europe to the benefits of millions of European consumers when they heat their houses, when they cook their food, and to the benefit, of course, also on European business who rely on gas for their production,” EU Competition Commissioner Margrethe Vestager said in Brussels.

The European Union has accused Gazprom of abusing its dominant position as a gas provider in Central and Eastern Europe, allegedly charging customers unfair prices, restricting the free flow of gas, and hindering competitors.

Gazprom expressed satisfaction with the commission's decision to settle its investigation of the firm without fines, with Deputy Chief Executive Aleksandr Medvedev calling it “the most reasonable outcome for the well-functioning of the entire European gas market."

However, a Polish diplomat said that “a far stricter decision, including a considerable financial fine, would have been fair and well justified” given “significant market violations committed by Gazprom.”

Lithuania’s Energy Minister Zygimantas Vaiciunas said Vilnius will “continue to look for ways to make Gazprom to indemnify” for the estimated losses of about 1.5 billion euros ($1.8 billion) that he said Gazprom inflicted on Lithuanian gas consumers by abusing its dominant position in the country.

Vaiciunas insisted that Lithuania has achieved energy independence from Russia by building an LNG terminal and has no long-term contracts with Gazprom.

The European Commission decision is “particularly worrying in the context of the aggressive Russian policy against the EU and its member states,” the diplomat added.

The conditions imposed on Gazprom in Central and Eastern Europe included removing restrictions on customers to resell gas across borders and enabling gas flows to and from the three Baltic states and Bulgaria, which the European Commission’s statement said are isolated from other EU member states “due to the lack of interconnectors.”

“Relevant Gazprom customers are given an effective tool to make sure their gas price reflects the price level in competitive Western European gas markets,” the statement also said.

If Gazprom breaks any of these obligations, the European Commission can impose a fine of up to 10 percent of the company's worldwide turnover, it added.

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