But there’s little chance that Gazprom’s main victims — Bulgaria, Estonia, Latvia, Lithuania and Poland — will be able to derail the draft deal.
The three Baltic countries are small and their voices aren’t loud. Poland’s diplomatic strength is diminished thanks to its unrelated battles with the Commission over accusations that the right-wing government is violating the EU’s democratic principles.
On the other side, the deal is backed by much of the Commission, energy interests, and powerful countries like Germany, which traditionally paid a lower price for Russian gas than Central Europe and which has major business dealings with Gazprom, including on the Nord Stream 2 pipeline project.
Geopolitics also hovers over the issue. Relations with Russia are already sour thanks to the sanctions imposed after Moscow’s 2014 annexation of Crimea and its military intervention in eastern Ukraine, and there’s little desire to see ties get even worse.
The College of Commissioners must still approve the draft deal later this year. In the mean time, the Commission could seek further concessions from Gazprom citing criticism from the review period, but the chances of scrapping the deal are remote.
“They can make a lot of noise, but ultimately the Commission will be mindful of the political implications of stymying a deal,” said Peter Alexiadis, an antitrust lawyer with law firm Gibson Dunn.
A Commission spokesperson said in a statement it will now assess all the comments it received “before deciding on whether or not to accept the commitments proposed by Gazprom.”
A spokesperson for Gazprom referred back to the company’s March statement on the draft settlement, which said the company’s commitments “demonstrate our willingness to address within the established procedure the relevant concerns of the Commission.”
The opposing countries haven’t even formed a united bloc in trying to derail the draft agreement.
“It does not help they are not speaking with one voice,” said Alexiadis.
Commission raids
The case, launched following raids in 2011 on the European offices of Gazprom and its customers, could have been very painful for the Russian gas company. The Commission accused it of abusing its market dominance in Central Europe by overcharging customers (all from countries out of favor with the Kremlin), and by preventing them from re-exporting the gas they had bought.
Lithuania alone estimates that it was overcharged €1.5 billion by Gazprom — the equivalent of Germany losing about €125 billion.
“You can be sure if the Germans overpaid billions, they would be jumping up and down,” said one adviser to a Baltic state.
Gazprom faced potentially crippling fines of up to 10 percent of annual revenues, a sum that could run to €9.5 billion or more, plus civil actions.
But the proposed settlement, announced in mid-March by the EU’s Competition Commissioner Margrethe Vestager, treats the company with kid gloves. Gazprom agreed to benchmark certain prices in Central and Eastern Europe against prices in Western Europe and to drop clauses restricting the re-export of gas.
The prospect of Gazprom emerging without paying penalties has Moscow positively gleeful. Asked last week about the proposed settlement, Vladimir Chizhov, the Russian ambassador to the EU, chuckled and said, “The European Commission is not always that bad.”
The deal’s supporters argue it is effective, saying it means Gazprom — and by extension Moscow — accepts the primacy of EU law.
“EU rules apply to all companies that operate in the European market — no matter if they are European or not,” Vestager said in March. “This case is about putting an end to Gazprom’s actions.”
But the Central Europeans want more than future good behavior; they want Gazprom to pay for its alleged past sins. In formal opinions filed ahead of a May 4 deadline, opponents of the settlement say it does not include any guarantee that Gazprom won’t ultimately return to its old tricks — and certainly not once the deal expires after eight years.
Poland announced just days after the settlement became public that it would appeal the deal. Poland’s state-controlled oil and gas company PGNiG subsequently filed new evidence it said showed the Commission should reopen the probe.
“We are disappointed by the way the antitrust proceedings have been concluded and by the commitments introduced by Gazprom,” Deputy Energy Minister Michał Kurtyka said in a statement.
Gazprom’s commitments do not guarantee that the company won’t breach competition rules in the future, Kurtyka said, and he complained that the Russian energy company won’t face any fines. “Measures that enable Gazprom to further abuse its monopolistic position are not acceptable,” he said.
Friendless Poles
But Poland’s rowing back on the rule of law at home makes it more difficult for it to build an anti-Gazprom alliance. The Poles are their own worst enemy, said the advisor to a Baltic government. “They are so violent and un-nuanced, it is very hard to pay much attention to what they say and write.”
Estonia also expressed anger that the Commission had opted to settle. “The competition proceedings should put an end to the abuse of a dominant position followed by a fine,” the Estonian government wrote.
Lithuania set out a detailed roadmap of how the conditions could be improved to meet their objections. Lithuania said Gazprom had managed to insert “numerous unreasonable and superfluous additional conditions” into the deal. Removing these, and adding additional commitments such as ensuring Lithuania a lower price on gas, would help preclude future abuses, it argued.
“Gazprom’s commitments do not compensate for nor repay those billions in damages incurred by consumers in Lithuania and the entire region because of Gazprom’s past abuse of its monopolistic position,” said Lithuania’s Energy Minister Žygimantas Vaičiūnas.
Other countries directly affected by the deal have been more muted in their response.
Bulgaria, for example, has limited itself to suggesting a series of amendments to the Commission. Latvia said it partly supports the draft compromise proposal and also submitted some proposed changes.
The Energy Community, which promotes EU laws in the bloc’s eastern and southeastern neighborhood, said it “generally supports the commitments proposed by Gazprom,” but would like to see them apply also to “restrictive clauses” in supply contracts with companies in its member countries and to interconnection agreements between Bulgaria and its members.
One lawyer advising an Eastern European utility said many respondents would be seeking technical changes, rather than to overturn the deal altogether. Though some parties are “viscerally opposed” to any deal, many comments would focus on “technically how it has been set up,” the lawyer said.
Those trying to overturn the deal are hoping to follow the model set by the Commission’s investigation into Google Search, the lawyer said. There, a deal struck by antitrust regulators was ditched in 2014 after going through three rounds of improvements and comments. But it died after running into opposition from powerful Western European industries and the governments of Germany and France.
Gazprom’s foes don’t have that sort of firepower. On the contrary, Berlin is one of the strongest supporters of allowing Gazprom greater access to the European market and, according to a Commission official, the German government told Vestager it was broadly satisfied with the compromise.
Original Article
Source: politico.eu
Author: Nicholas Hirst, Anca Gurzu and David M. Herszenhorn
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