EU Effort to Punish Gazprom by Retroactive Antitrust Case Absurd – Expert

Ben Aris, editor in chief of Business New Europe magazine, says that the European Union's decision to serve Gazprom with a retroactive an anti-monopoly case is a foolish thing to do, adding that it seems to be a politically motivated decision.

Speaking to Radio Sputnik on Wednesday, Aris explained that while Gazprom's network of fixed pipelines makes it a natural monopoly, and that "from a business point of view, if you introduce new regulations, you can't turn around and implement them retroactively on contracts that were signed in compliance with existing regulations."

Aris noted that even if Gazprom "may have been charging economic rent for some of the gas deliveries…those deals were cut under existing regulations and European countries signed them, agreeing to the prices."

The expert explained that while "it's normal for governments to want to regulate natural monopolies…this should be done at the level of an intergovernmental agreement, rather than introducing legislation and then applying it retroactively."

Noting that this move is "a very aggressive thing for the EU to do," Aris stated that it also "does smack somewhat of politically motivated punishment for Russia to add to the pressure that comes with all the other sanctions related to the confrontation in Ukraine at the moment." Noting that Europe appears to be "rubbing salt into the wound," the expert states that the antitrust case is but another sign that "the relationship between the EU and Russia are the worst that they've been in the last 20 years."

On Wednesday, the European Commission filed formal antitrust charges against Gazprom over alleged overcharging of state customers in Central and Eastern Europe.

.@EU_Commission sends Statement of Objections to #Gazprom for alleged abuse of dominance http://t.co/1l0Z19OuzM pic.twitter.com/ysh87pbBaZ

— European Commission (@EU_Commission) 22 апреля 2015

Statement of Objection against Gazprom activities in 8 countries. Our preliminary view: Gazprom partitioned market and charged unfair prices

— Margrethe Vestager (@vestager) 22 апреля 2015

The EC says that Gazprom has 12 weeks to respond to the Statement of Objections, and expressed interest in bilateral talks on the matter with company representatives. It adds that Gazprom might be obliged to pay a fine equal to up to 10 percent of its gross global trade.
Gazprom has issued an official reply, noting the company "considers the claims brought by the European Commission to be unsubstantiated."

#Gazprom Statement on the adoption of the EU Commission’s Statement of Objections within its antitrust investigation: http://t.co/APRigMq6ar

— Gazprom (@GazpromNewsEN) 22 апреля 2015

The company's press release states furthermore that Gazprom "strictly adheres to all the rules of international law and legislation in the countries where Gazprom Group operates. Operation of Gazprom Group on the EU market, including applicable principles of gas pricing, meets the standards that are used by other producers and exporters of gas."

Commenting on the matter on Wednesday, Russian Foreign Minister Sergei Lavrov noted that all contracts signed between Gazprom and its partners are in accordance with legislation effective in the European Union at the time of the signing.

Europe depends on Russian energy imports for 30 percent of its energy needs. Several Central and Eastern European countries rely heavily on Gazprom for their gas supplies.

Gazprom, a Russian state-owned company, is the world's largest natural gas producer, accounting for up to 14 percent of global natural gas production.