Blog Post

The EU antitrust case: no big deal for Gazprom

Earlier this week, the European Commission presented the draft compromise reached with Gazprom regarding the antitrust case launched in April. Simone Tagliapietra argues that Gazprom has no reason to break the commitments made in the draft compromise, since they are well-aligned with its own interests.

By: Date: March 15, 2017 Topic: Energy & Climate

The author would like to thank Georgios Petropoulos and Georg Zachmann for helpful comments. He assumes responsibility for all errors.

Earlier this week, the European Commission presented the draft compromise reached with Gazprom to end a probe into the Russian company’s alleged abuse of its dominant market position in Central and Eastern Europe.

This proposed amicable settlement comes two years after the European Commission sent a Statement of Objections to Gazprom, alleging that the company was:

  1. Hindering cross-border gas sales in the Baltic States, Bulgaria, Czech Republic, Poland, Hungary and Slovakia, by imposing territorial restrictions in supply agreements with wholesalers and industrial customers;
  2. Charging unfair prices in the Baltic States, Bulgaria and Poland, by applying territorial restrictions in relevant contracts;
  3. Making gas supplies conditional on obtaining unrelated commitments from wholesalers concerning gas transport infrastructure, such as the South Stream project in Bulgaria and the Yamal pipeline in Poland.

Gazprom responded to these three allegations by, respectively, committing to:

  1. Remove all contractual barriers to the free flow of gas in Central and Eastern European gas markets and to take active steps to enable their better integration (e.g. by removing export bans and destination clauses). Gazprom also committed to facilitate interconnection agreements between Bulgaria and Greece, and to create opportunities for more gas flows to the Baltic States and Bulgaria;
  2. Introduce competitive benchmarks, including Western European hub prices, into its price review clauses in contracts with customers in the Baltic States, Bulgaria and Poland. By giving the customers an explicit contractual right to trigger a price review when the prices they pay diverge from competitive price benchmarks, this should ensure competitive gas prices in these regions. Gazprom also committed to more frequent and efficient price reviews;
  3. Not to seek any damages from its Bulgarian partners following the termination of the South Stream project.

European Commissioner for Competition, Margrethe Vestager, declared that Gazprom’s commitments fully address the Commission’s competition concerns, and provide a forward-looking solution in line with the EU rules.

On the other hand, some Central and Eastern European stakeholders – such as the CEO of the Polish state-run energy company PGNiG – defined these commitments as highly insufficient.

From a market perspective, the draft compromise does not seem to represent a big deal for Gazprom. In fact, as anticipated in a previous Blog of September 2015, it seems to be in Gazprom’s own interest to amicably settle the issue in this way – for at least three reasons:

  1. Most obviously, to avoid an infringement decision that could ultimately fine the company up to US$ 8 billion (i.e. 10 percent of its global annual turnover in 2015);
  2. Without an amicable settlement, the European Commission would anyhow act to restore competition, by imposing measures to stop the harmful behaviour and reduce the risk of future violations. As Mariniello (2014) points out, ‘in some past cases in the energy sector, the European Commission required the dominant company to divest significant assets for capacity generation and favour competitors’ new investment.’;
  3. Commitments required by the European Commission are, at the end of the day, aligned with Gazprom’s own commercial interests. Europe has been Gazprom’s core market for five decades, and it will likely remain so in the future. The latest developments with China have indeed illustrated Gazprom’s difficulty to lessen its dependence on the European market. Up to 2020, large volumes of cheap LNG will flood international and European gas markets. Gazprom is aware of this forthcoming competition, and is gradually opting for a more flexible marketing approach. This is, for instance, illustrated by the 2015 auctions on the German market and the 2016 auctions on the Baltic markets. The commitments proposed to the European Commission therefore fit well into this new marketing strategy.

The European Commission has given seven weeks to all stakeholders to submit their views on Gazprom’s commitments. Taking into account the comments received, the Commission will then take a final decision on whether or not to finalise the deal with Gazprom.

Once finalised, the deal will become legally binding. Should Gazprom ever break its commitments, the Commission will thus always be able to impose the up-to-US$ 8 billion fine. However, there seems to be no reason for Gazprom to escape its promises, since they are basically well-aligned with its own interests.

Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read article More on this topic More by this author

Blog Post

Beyond Nord Stream 2: a look at Russia’s Turk Stream project

Since 2015, Nord Stream 2 has been at the centre of all European discussions concerning the EU-Russia relations. But as endless political discussions in Europe are being held on this pipeline project, the pipes of another similar Russian pipeline project – Turk Stream – are already being laid by Gazprom at the bottom of the Black Sea. This piece looks at these developments, analysing their strategic impacts on Europe.

By: Simone Tagliapietra Topic: Energy & Climate Date: July 4, 2018
Read article More on this topic More by this author

Blog Post

Ukraine: The struggle for reforms continues

The modernisation of the Ukrainian economy and state continues to develop at an unsatisfactory pace due to a lack of pro-reform political consensus. The two upcoming election campaigns in 2019 (presidential and parliamentary) make the reform process even slower and additionally put its effectiveness and sustainability under risk. The international community has a limited toolkit to overcome this stalemate.

By: Marek Dabrowski Topic: Global Economics & Governance Date: July 4, 2018
Read article

Parliamentary Testimony

European Parliament

Brexit and Energy Policy

Testimony before the European Parliament's Committee on Industry, Research and Energy

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate, European Parliament, Testimonies Date: May 28, 2018
Read article

Blog Post

The Iran nuclear deal crisis: Lessons from the 1982 transatlantic dispute over the Siberian gas pipeline

A US president taking a unilateral decision that affects European interests; European policymakers outraged at US interference in their affairs; European businesses fearing losing access to some international markets – sound familiar? This is the story of a crisis that took place in 1982 regarding the Siberian gas pipeline project; its outcome should inspire optimism in the Europeans’ capacity to counteract Donald Trump’s decision to withdraw the US from the Iranian nuclear deal.

By: Emmanuel Mourlon-Druol and Angela Romano Topic: Energy & Climate, European Macroeconomics & Governance Date: May 23, 2018
Read article More on this topic More by this author


The clock is ticking: Ukraine’s last chance to prevent Nord Stream 2

Ukraine is running out of time to provide western gas consumers with the necessary trust to abandon the Nord Stream 2 gas pipeline project.

By: Georg Zachmann Topic: Energy & Climate Date: January 24, 2018
Read article Download PDF

External Publication

European Parliament

The Impact of Brexit on the EU Energy System

What will be the impact of Brexit on the EU energy system? With or without the UK, the EU will be able to complete its market, to achieve its climate and energy targets with feasible readjustments, and to maintain supply security

By: Gustav Fredriksson, Alexander Roth, Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, European Parliament, Testimonies Date: December 19, 2017
Read article More by this author


EU should pay member states to get rid of coal

The European Union should act to ensure the continued transformation of its energy system, and encourage member states to overcome their dependence on coal for supplying electricity. Helping coal-mining regions with the transition should require €150 million per year – a mere 0.1% of the total EU budget – and the EU would not even need to establish a new fund to support it.

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: December 5, 2017
Read article Download PDF More by this author

Policy Brief

Beyond coal: facilitating the transition in Europe

Europe has a dirty energy secret: coal is producing a quarter of the electricity, but three-quarters of the emissions. The EU should propose that its member countries speedily phase out coal and put in place a scheme to guarantee the social welfare of coal miners who stand to lose their jobs, making a better use of the European Globalisation Adjustment Fund (EGF)

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: November 23, 2017
Read article More by this author

Blog Post

The impact of Brexit on the Irish energy system – pragmatism vs. principles

Brexit promises pain for Ireland that could be cut off from the EU internal market and be left exposed to market instability in the UK. Georg Zachmann assesses the scale of the possible damage for Ireland, and how the UK and EU might use the special energy relations on the Irish island to commit to a pragmatic solution.

By: Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance Date: November 21, 2017
Read article Download PDF More on this topic

Policy Contribution

A new strategy for European Union-Turkey energy cooperation

In a period of stress in the relationship between the European Union and Turkey, cooperation over energy could be a bright spot, because of strong mutual interests. Fields such as renewables, energy efficiency, nuclear energy and emissions trading could make a real impact on long-term energy, climate and environmental sustainability, and on overall macroeconomic and geopolitical stability.

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Date: October 24, 2017
Read about event More on this topic

Past Event

Past Event

EU-Turkey energy and climate dialogues

This event is part of the joint Bruegel-IPC initiative European Neighbourhood Energy and Climate Dialogues. This is a closed door event, open only to Bruegel's members and a group of experts.

Speakers: Dirk Buschle, Ahmet Evin, Myriam Ferran, Philipp Godron, Daniel Grütjen, Sohbet Karbuz, Susanne Nies, Mehmet Oguctu, Megan Richards, John Roberts, Umit Sahin, Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 20, 2017
Read article More on this topic More by this author

Blog Post

We need a broader, greener EU-Turkey energy partnership

Energy is a vital part of the EU’s increasingly strained relationship with Turkey. It’s also one of the areas where there is still a lot of potential to find positive synergies. However, the EU’s strategy is too focussed on oil and gas. We need a broader and more sustainable approach to EU-Turkey energy relations.

By: Simone Tagliapietra Topic: Energy & Climate Date: October 19, 2017
Load more posts