Gas prices are rising in Europe and some are requesting an antitrust investigation into Russian Gazprom. Time to look at past cases against the company and their outcomes.
As temperatures are getting colder, gas prices have almost tripled in Europe since the middle of this year. About 37% of EU gas imports stem from Russia, and some blame Russian state-controlled Gazprom for the price increases. A group of members of the European Parliament has reportedly sent a letter to the European Commission to demand an antitrust investigation, alleging market manipulation by Gazprom in order to pressure the EU into a faster opening of the Nord Stream 2 pipeline (itself a major political issue). At least one Member State is apparently backing the request.
Interestingly, rising prices do not seem to be unique to Europe – the Russian antitrust regulator Federal Antimonopoly Service has “recommended” that Gazprom should sell more gas domestically to address price increases. A similar warning was given to a Gazprom subsidiary also in 2018.
We are not going to speculate whether there is anything to the new allegations in Europe. However, over the years Gazprom has been the subject of a number of European antitrust investigations, and while the Commission will be considering what to do with the new request on its table, it is worth taking a look at four of those past cases.
The Commission case(s)
In May 2018, the European Commission ended an investigation against Gazprom which had started with dawn raids already in 2011. The Commission did not impose fines, but accepted legally binding commitments from Gazprom, including the removal of contractual restrictions placed on customers, an obligation to facilitate gas flows, and the introduction of a structured process meant to ensure competitive gas prices.
The decision was not welcomed by everyone. In a commitment decision, the European Commission expressly leaves open whether a company has infringed antitrust law. Some felt that Gazprom should have been fined for its conduct instead of getting away with commitments: An appeal against the decision by Polish state-owned PGNiG is pending before the General Court. PGNiG is also appealing a 2019 Commission decision to reject a complaint against Gazprom lodged by PGNiG in March 2017.
Others have argued that the Commission was able to achieve broader commitments than it would have been the case in a fine decision and that the regulator has, therefore, made the right policy choice.
The Polish world (?) record
Speaking of Poland, in August last year the Polish antitrust regulator fined Gazprom approx. EUR 48 million for failing to cooperate with its investigation into – have a guess! – Nord Stream 2. The decision is under appeal, but it got even worse for Gazprom: Just two months later, in October last year, the Polish regulator fined Gazprom and other companies a record of approx. EUR 6.5 billion for concluding a number of agreements regarding the financing of Nord Stream 2 without prior approval. While six companies were fined in total, with a fine of approx. EUR 6.45 billion Gazprom carried the heaviest burden by far. All companies have reportedly appealed the decision.
Lithuania still looking for money
The antitrust regulator in Poland’s neighbour Lithuania fined Gazprom approx. EUR 37 million already in 2014 for breaching commitments imposed in a previous merger clearance. The Lithuanian supreme court later upheld the decision. Nearly unheard of in the European antitrust world, according to statements made by the chair of the Lithuanian regulator in May, Gazprom has not paid the fine (yet).
Bulgaria just starting
During the pandemic, global oil prices dropped and so did fuel prices in many countries, but apparently not far enough in Bulgaria. The Bulgarian antitrust regulator launched an investigation against 11 companies in April last year, concerning potential breaches of antitrust law when setting fuel prices. Gazprom’s Bulgarian branch is amongst the companies being investigated.
Where does this leave things?
It is difficult to foresee what the Commission will do with the request for an investigation on its table. But it is safe to say that Gazprom has not exactly been the darling of European antitrust regulators, in particular in Eastern Europe. And what is more, just last week Ukraine discussed with the European Commission whether a new gas deal between Hungary and Gazprom breaks EU antitrust rules.
Whatever the Commission will do, the gas and energy crisis itself will certainly stay high on the agenda of European politics, with France moving to block further price increases and with the Eurogroup finance ministers having covered the topic in a meeting yesterday based on a designated “issues note”. The energy crisis takes up more than half of the meeting’s closing remarks, while EU Member States are calling on the Commission for a coordinated response to the crisis.