Gazprom bids to end EU antitrust probe

By NICHOLAS HIRST

9/22/15, 3:35 PM CET

Updated9/22/15, 5:47 PM CET

Gazprom has offered to settle antitrust charges leveled by the European Commission in a bid to end a politically charged investigation that could cost it billions in fines.

The company, which is the dominant supplier of natural gas in much of Central and Eastern Europe, addressed the Commission’s concerns about how Gazprom sets prices, according to a person briefed on the negotiations.

The Commission confirmed it had received the proposal and would “assess [it] carefully.” The offer will not pause the ongoing investigation.

Gazprom said in a statement that it had yet to discuss the specific offer with Commission officials. It must submit its official response to EU antitrust authorities by September 28.

Margrethe Vestager, the European commissioner for competition, accused Gazprom in April of bullying and overcharging customers in Central and Eastern Europe. The main charges: restricting the ability of customers to resell the gas to other EU countries, and linking prices to oil. Both allegedly breach antitrust rules.

The probe was sparked by a formal complaint filed by Lithuania, but the Commission’s concerns relate to contracts struck in eight Central and Eastern European countries: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

Tension between the EU and Russia over the conflict in Ukraine have loomed large over the inquiry. The Commission was preparing to charge Gazprom in early 2014 but pulled back for fear fueling international tensions.

Nonetheless, accusations of political machinations and reprisals have dogged the inquiry since it began in 2012. Gazprom representatives first argued the Commission did not have jurisdiction to investigate the Kremlin-controlled company and should instead engage in direct negotiations with the Russian government.

The government of Russian President Vladimir Putin subsequently adopted a law forbidding strategic firms, including Gazprom, from cooperating with foreign regulators without state permission.

Gazprom has discussed a possible settlement on-and-off with the Commission since the inquiry began. Previous settlement talks were thought to have broken down over Commission demands that Gazprom alter its pricing formula for Central and Eastern Europe. Gazprom repeated in July that it was considering settling the case.