EU Antitrust Regulators to Charge Gazprom with Overcharging Customers

European Union's anti-trust regulators are preparing to bring charges against Russian gas behemoth OAO Gazprom for allegedly overcharging customers in Eastern Europe. The move comes just a week after the EU regulators accused US internet giant Google Inc of abusing its dominant market position. EU's competition commissioner Margrethe Vestager is determined to take on big corporates for abusing their dominant positions in the market and violating European anti-trust rules. Gazprom, a vital energy supplier for Europe, has been under investigation since September 2012 for imposing unfair gas prices and holding back gas supplies to Europe.

Key Takeaways:

• The EU's competition commissioner Margrethe Vestager is expected to send a statement of objections to Gazprom this week, outlining the EC's concerns over possible anti-competitive practices.
• Gazprom, a state-controlled company, supplies about 30% of Europe's gas requirement and has been under investigation since September 2012 for imposing unfair gas prices and holding back gas supplies to Europe.
• If the allegations are proved right, the commissioner has the power to order changes in the companies' business practices and levy fines of up to 10% of their annual global revenue.
• Gazprom accounted for 73% of Russian and 13% of global production of natural gas in 2010.
• The EC's move is likely to escalate the standoff between Europe and Russia, which started with the crisis in Ukraine.
• Gazprom had always wanted to settle the issue through talks, but a statement of objections from the EC is not expected to be a welcome move.
• EU antitrust rules allow regulators to lift the threat of fines in certain cases, excluding cartels, when companies make commitments to end anti-competitive behavior.

Statistics:

• Gazprom's annual turnover is $100 billion.
• The company supplies about 30% of Europe's gas requirement.
• Gazprom accounted for 73% of Russian and 13% of global production of natural gas in 2010.
• The EC has the power to levy fines of up to 10% of Gazprom's annual global revenue.
• Disputes over gas deals between Moscow and Kiev have disrupted vital gas supplies to Europe in recent years.

Sources:

• Reuters, yesterday
• Bloomberg, last month
• EC, in a speech in Washington last week
• Domain-b.com, 2010
• Gazprom's annual report, 2010 (Gazprom's turnover and gas production figures)
• EC, in a similar statement of objections to Google (EC accuses Google of distorting internet search results)