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EC mulls Gazprom's proposals to end EU gas market antitrust case

Brussels — Russian gas group Gazprom has committed to change its business practices to settle an EU antitrust case focused on central and eastern European natural gas markets, a European Commission spokeswoman said Tuesday.

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"The commission will now carefully assess if they address, in a forward looking manner, the commission's competition concerns in line with EU antitrust rules," the spokeswoman said, without giving details of the commitments.

"To be effective, the commitments would have to ensure the free flow of gas in central and eastern Europe at competitive prices," she said.

The EC formally charged Gazprom in April 2015 with alleged market abuse in central and eastern Europe.



The charges focused on Gazprom restricting gas resales across borders and allegedly charging unfair prices.

Gazprom has since been negotiating with the EC on commitments to address these concerns in order to settle the case informally and avoid fines.

The EC said it received Gazprom's formal commitments on December 27.

There is no legal deadline for concluding antitrust cases.

If the EC decides Gazprom's commitments address the antitrust concerns, then it will publish them in the EU's Official Journal and seek market players' views.

If the results of this market test are positive, then the EC will make the commitments binding.

If Gazprom then breaks its commitments, the EC can fine it up to 10% of its total worldwide turnover without having to prove the original antitrust concern.

This is the standard procedure for EU antitrust cases settled with commitments.

Other major gas companies which have settled EU antitrust cases with commitments in the past 10 years include Belgium's Distrigas (now rebranded and part of Italy's Eni), France's GDF Suez (now rebranded as Engie), Germany's E.ON (now split into E.ON and Uniper) and RWE, as well as Eni itself directly.

RESTRICTED RESALES

The EC's charges included that Gazprom was restricting gas resales by customers in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia to companies in other countries.

This means that wholesalers with access to cheaper Russian gas in the region were unable to resell it to those paying higher prices for Russian gas, the EC said in April 2015.

This may have enabled Gazprom to charge unfairly high prices in Bulgaria, Estonia, Latvia, Lithuania and Poland, the EC said.

Gazprom is the dominant supplier in the region, with national market shares ranging from well above 50% to 100%.

The EC also challenged Gazprom's formulae for indexing gas prices to oil prices, saying at the time that they "unduly favored Gazprom" and contributed to unfair prices.

--Siobhan Hall, siobhan.hall@spglobal.com --Edited by Dan Lalor, daniel.lalor@spglobal.com