Naftogaz Challenges Gazprom’s Monopoly through the European Commission

On Dec. 21, Naftogaz filed a complaint to the European Commission against the anticompetitive behavior of Gazprom, which is one of the key causes of the current severe energy crisis in Europe.

The complaint was submitted to the Commission’s Directorate-General for Competition (DG COMP), which is essentially the EU’s antitrust body. DG COMP has full authority not only to investigate anticompetitive infringements committed by the participants of the European market and to impose appropriate sanctions based on the investigation results, but also to take immediate actions to normalize the situation before the investigation is completed.

It is with such a request for immediate action that Naftogaz has appealed to the EC, as we believe that a failure to take immediate action will lead to significant and irreparable damage to competition in the EU’s internal market.

In a situation of high demand for gas in the EU, which has caused a drastic price hike in the wholesale market, Gazprom, for no good reason, refuses to boost its gas supplies to Europe and prevents other extractive companies from Russia and Central Asia from supplying their gas to the EU. Gazprom’s actions do not have a reasonable economic explanation: in a situation of high demand for gas in Europe it would be profitable to sell as much gas to Europe as possible; instead, Gazprom has reduced its supplies compared to the usual level of supply at this time of the year. Gazprom’s tactics in the current situation are nothing other than a ‘gas blackmail’ of European institutions aimed at obtaining all the permits needed to launch the Nord Stream 2 without complying with the requirements of the European legislation. Such actions represent Gazprom’s abuse of their dominant position, are illegal, and the EC has the power to stop such abuses.

In order to normalize the situation, Naftogaz is asking the European Commission to oblige Gazprom to put significant volumes of gas up for sale on their electronic trading platform as early as this winter, on the same terms as gas supplies on the border between Ukraine and Russia – or, at least, on the borders between Ukraine and the EU. It is also asking to provide independent gas producers from Russia and Central Asia with access to Gazprom’s gas pipelines in Russia so that they could deliver their gas to the Ukrainian border, at which point the Gas Transmission System Operator of Ukraine will be able to deliver it further to Europe.

By Olha Ivaniv, Head of Arbitration, Naftogaz