Vestager: We would have preferred to close the Bulgaria gas case without a fine

Margrethe Vestager in her office on 17 December 2018. [Georgi Gotev]

The Commission imposed on Monday (17 December) a multi-million fine on Bulgaria’s BEH for blocking access to key natural gas infrastructure in the country. Competition Commissioner Margrethe Vestager said the fine could have been avoided, had Sofia decided to follow another negotiation strategy.

The fine of €77 million is imposed on Bulgarian Energy Holding (BEH), its gas supply subsidiary Bulgargaz and its gas infrastructure subsidiary Bulgartransgaz (the BEH group), for blocking competitors’ access to key gas infrastructure in Bulgaria, in breach of EU antitrust rules. The announcement wasn’t a surprise.

Commission to fine Bulgaria over gas market distortions

The European Commission will fine Bulgarian Energy Holding as early as this month for hindering rivals’ access to key gas infrastructure, Bloomberg reported on Tuesday (11 December), based on information from three sources familiar with the dossier.

The Bulgarian gas grid is owned by Bulgartransgaz. It is part of the Bulgarian Energy Holding (BEH), which has amassed a multi-million euro debt to the state budget. The BEH holding was established in 2008 by then-Prime Minister Sergei Stanishev, with the aim of cross-subsidising state companies at a loss.

The intricacies of the Bulgarian energy trade have helped keep monopolies alive and resist EU energy liberalisation rules.

Speaking to Bulgarian journalists, Vestager made it clear that the EU executive would have preferred to solve the case with commitments.

She said that in the past, the Commission had been able to solve another case with BEH, on the electricity market, as well as the Romanian Transgas case and the bigger Gazprom case via binding commitments.

As expected, Vestager lets Gazprom off the hook

The EU’s antitrust regulators have ended their investigation into Gazprom without imposing any fines, the Competition Commissioner Margrethe Vestager announced on Thursday (24 May). The Russian gas giant welcomed the EU’s decision and promised to reform.

In the current BEH case, she said that what the Commission has found is that from 2010 to 2015 BEH Holding has been responsible for denying access.

“The misused their dominant position to deny access to the infrastructure, not only the pipes, but also the storage facilities”, she said, explaining that in this way, BEH denied access to other gas importers.

“We found that the pipe transport capacity was fully booked for a very long period of time, even though the capacity was not needed”, she said.

This is why the Commission decided to have an Article 7 Prohibition decision, she said.

According to antitrust rules, the Commission may require the company concerned to stop the infringement, to impose remedies and/or impose a fine (“prohibition decision” or “Article 7 decision”). The prohibition basically means that the illegal practice would not be repeated.

“We would be happy to solve the case with commitments, but that was not been possible, even though we’ve been trying three years to do that”, Vestager said. She also said it had not been possible to solve the case via the so-called cooperation procedure, which could have resulted in a substantial reduction of the fine.

She made reference to the other cases, including Gazprom, to illustrate that the Commission was open to settlements other than prohibition decisions.

Last year in November the Bulgarian parliament decided not to recognise the Commission’s positions with regard to the BEH case and not to pay the fine.

Bulgaria on collision course with EU in gas monopoly case

At a secret session on Saturday (24 November), the Bulgarian parliament decided not to recognise the European Commission’s positions with regard to a case of abuse of dominant position in the gas market by the Bulgarian Energy Holding (BEH) and its subsidiaries Bulgargaz and Bulgartransgaz.

EURACTIV asked Vestager what would happen in case Bulgaria would not pay.

Vestager said it happened very rarely that fines were not paid, and even if countries and respective companies appealed the decision, they would still need to pay the fine. If this would not happen, the Commission would go to the European Court of Justice. Eventually the Court can impose a daily penalty, until fines are being paid.

EURACTIV asked Vestager if the practice to fully book the capacities for gas transit and storage was a Gazprom strategy, or if BEH was implementing a Gazprom strategy.

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She answered:

“No, I don’t think BEH is implementing a Gazprom strategy”.

Asked if the BEH strategy was not in favour of Gazprom, she said:

“That I don’t know. We don’t do soul and mind interrogations. As far as we see, it’s the BEH strategy to prevent imports to the country to compete on the supply of gas.”

Asked if she believed that BEH had discontinued their anti-competition practices, the commissioner  answered that the Bulgarian transmission system operator had sufficient powers to say that overbooking capacity cannot happen anymore.

Asked if she was aware of the criticism against the private company Overgas for having introduced the complaint, Vestager gave a different version.

“Actually we took the case on our own initiative”, she said.

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