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29/07/2016

EU’s Almunia readying antitrust charges against Gazprom

Europe's East

EU’s Almunia readying antitrust charges against Gazprom

A Gazprom building in Moscow. [Thawt Hawthje/Flickr]

European Union regulators are poised to charge Russian gas producer Gazprom with anti-competitive behaviour after a two-year investigation, Europe’s antitrust chief said on Tuesday (23 September).

Gazprom, which is Russian state-owned, has been under regulatory fire since September 2012, for allegedly over-charging customers in Eastern Europe, blocking rival suppliers and hindering the free flow of gas across some EU countries.

The company said earlier this year that it was keen to settle the case, warding off a possible fine of as much as $13.6 billion, but discussions with the European Commission have stalled over the issue of what constitutes appropriate pricing.

European Competition Commissioner Joaquín Almunia told European lawmakers that he was preparing a so-called statement of objections, or a charge sheet, which sets out suspected violations of EU rules for Gazprom.

Almunia, who is scheduled to leave office at the end of October, did not say when he would send the document to Gazprom. The company can ask for a closed-door hearing to defend its case.

Any case is likely to be closely scrutinised at a particularly sensitive time for EU-Russian relations.  Both the EU and Moscow are indulging in tit-for-tat sanctions in the wake of the Ukraine crisis and Russia’s annexation of Crimea. 

New EU sanctions that became effective on 12 September would limit access by Russian oil companies to funds. Similar sanctions from the United States adopted on the same day hit Russia’s biggest bank and an arms maker, and bar US firms from helping five big Russian oil companies explore hard to reach deposits.

Moscow has already responded to sanctions by banning the import of most Western food. It said it could take further measures and might appeal to the World Trade Organisation.

The crisis in Ukraine erupted after its former President, Viktor Yanukovich, cancelled plans to sign trade and political pacts with the EU in November 2013 and instead sought closer ties with Russia, triggering protests that turned bloody and drove him from power.

Moscow annexed Crimea in March, following a referendum staged after Russian forces established control over the Black Sea peninsula in the biggest East-West crisis since the Cold War.

Pro-Russian militants control buildings in more than ten towns in eastern Ukraine, after launching their uprising on 6 April. On 11 May, pro-Moscow rebels declared a resounding victory in a referendum in Donetsk and Luhansk, which the West called illegal and illegitimate.

The fighting escalated sharply after Ukrainian President Petro Poroshenko ordered on 1 July an assault on separatists. The EU’s resolve to punish Russia strengthened after the downing in Ukraine on 17 July of a Malaysia Airlines passenger plane, killing all 298 people on board. 194 of the passengers were from the Netherlands.

Western leaders say pro-Russian rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Moscow has blamed Kyiv for the tragedy.

On 27 August, NATO and the US said Russian incursions into Ukraine took an ‘overt and obvious form’ and on 28 August Poroshenko said Russia had invaded Ukraine.

Ukraine’s military said on Monday (22 February) that it was pulling back artillery and heavy armour from the front line with separatists, backing President Petro Poroshenko’s peace plan for a conflict that has cost more than 3,000 lives.

Taking a noticeably soft line on the Russian-backed separatists for the first time, military spokesman Andriy Lysenko said reduced fire from the rebels and Russian forces meant the Ukrainian army could begin withdrawing heavy weaponry from a proposed 30-km buffer zone.

His announcement was in line with a call by Poroshenko on Sunday night for Ukrainians to back his peace plan, which he said was needed to keep support of the US and other Western governments.

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