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Gazprom Responds To EU Antitrust Probe

There are concerns the case could grow into a transnational political dispute and threaten gas supplies to European countries dependent on Russia imports.
Gazprom has responded to an EU antitrust investigation, saying it "scrupulously abides by all the provisions of international law" and national laws where it does business.

Russia's state-controlled natural-gas monopoly did not deny breaking EU antitrust laws, but said its "activities on the EU market fully comply with the legal standards applied by other natural-gas producers and exporters."

On September 4, the European Commission announced a formal investigation into Gazprom's dominant position in Central and Eastern Europe's gas markets -- including Gazprom's practices in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Slovakia. Other countries could be included later.

The probe centers on allegations Gazprom violated EU antitrust laws by hindering competitors, holding back gas deliveries, and charging customers unfair prices by linking the price of oil with the price of gas.

"We received a complaint by Lithuania, which is covered by the present investigation, and other than this, the investigation was triggered by the monitoring that the [European] Commission maintains in the energy market in general and by information that has been confirmed by market players as well," EU spokesman on competition Antoine Colombani said.

Gazprom's response on September 5 noted it was registered "outside the jurisdiction of the EU" and empowered as a "strategic organization, administered by the government" of Russia.

Colombani downplayed ramifications on political relations between Brussels and Moscow, saying that "this is an investigation that concerns Gazprom, which is a company active in the EU single market, which sells gas in the EU, so we are looking at the behavior of this company. This does not concern Russia."

International Politics

But there are concerns the case could grow into a transnational political dispute and threaten gas supplies to European countries dependent on Russia imports.

Russia supplies 25 percent of the gas consumed in the EU -- including much of the deliveries to Central and Eastern European countries.

Georg Zachmann, a researcher at the Brussels-based think tank Bruegel, says he presumes the investigation eventually will lead to political discussions at a higher level.

Christian Egenhofer, an energy expert at the Center for European Policy Studies, says Brussels cannot turn a blind eye to antitrust violations just because Gazprom or Russia are so important.

He says that the confirmation of violations "will increase leverage by the Central and Eastern European gas companies. They will say: 'Hey, Gazprom, we cannot sign this contract. It is illegal. If we sign it we have no legal certainty.'"

Egenhofer continues, "Of course, the whole matter will at some stage come to a higher political level and what happens there, I don't know."

Meanwhile, EU energy spokeswoman Marlene Holzner said Europe was better prepared for gas cuts than it was in 2009, when a dispute between Russia and Ukraine caused EU shortage.

"If in some months we see that there is a disruption of supply, no matter of if it is Russia or other member states or other suppliers concerned, we are much better prepared for that than in the past," she said.

"As you remember we had a crisis in 2009 and after that we have changed our legislation. And one very important point is that every single member state has to make sure that the gas companies have gas for at least 30 days for protected consumers."

With reporting by Brussels correspondent Rikard Jozwiak and Prague correspondent Ronald Synovitz
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