The European Union adopted a decision on Thursday to impose binding obligations on Russia’s Gazprom that will address competition concerns. The announcement settles a seven-year antitrust dispute with the state-owned energy company, which has been accused of market abuse and impeding the free flow of gas in Central and Eastern Europe.
The settlement will improve gas flows in the EU’s eastern member states and make prices more competitive. In exchange for these concessions, Gazprom avoided a potentially hefty fine that could have cost the company billions of euros.
EU Antitrust Commissioner Margrethe Vestager said Gazprom will be required to ease its hold on the Central and Eastern European markets, giving consumers “an effective tool to make sure that the price they pay is competitive.”
The decision “shows that the company has been defanged and is no longer a threat to Europe’s energy security,” reports Bloomberg.
As part of the settlement, Gazprom must remove restrictions that prevent customers from reselling gas across borders, which is expected to improve gas flows to EU members such as the Baltic states and Bulgaria.
Gazprom will also be required to integrate Central and Eastern European gas markets by allowing customers who have purchased gas for delivery in Poland, Hungary or Slovakia to instead have the Russian company deliver the gas to Bulgaria, Estonia, Latvia and Lithuania. Doing so, the Commission says, will help compensate for the lack of infrastructure connecting these countries with neighbouring EU gas markets.
The obligations also require Gazprom to allow customers with long-term contracts to demand lower prices if they are paying more than customers in competitive Western European markets.
The EU began enforcing the obligations on Thursday and will continue to do so for eight years. The Russian energy giant also gave the EU power to arbitrate disputes in accordance with EU competition law. If Gazprom is discovered to be in violation of any of the obligations, the EU can fine the company as much as 10% of its global turnover.
Poland’s PGNiG, a state-controlled oil and gas giant, and other Gazprom clients had hoped the Russian company would be slapped with a substantial fine, reports Bloomberg.
Vestager acknowledged that some had been hoping for a fine on Gazprom, particularly after U.S. software company Microsoft was hit with an EU fine in 2013 totalling more than half a billion euros.
“However, a fine would not have achieved all of our competition objectives in this case,” she said, according to AP. Vestager emphasised that the EU wanted Gazprom to alter its practices and comply with fair competition rules.
Gazprom said it was satisfied with the result. “We believe that today’s decision is the most reasonable outcome for the well-functioning of the entire European gas market,” the company’s Deputy CEO Alexander Medvedev said in a statement carried by Tass, Russia’s state news agency.