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Russia's Gazprom has until September 11 to give official response to EC on antitrust case

August 10, 2015, 13:27 UTC+3 MOSCOW

According to European Union competition commissioner Margrethe Vestager, Gazprom groundlessly hiked gas prices for Latvia, Lithuania, Estonia, Poland, Bulgaria

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© ITAR-TASS/Stanislav Krasilnikov

MOSCOW, August 10. / TASS / Russian state-owned gaz major has until September 11, 2015 to give a response to the European Commission on the breach of the EU anti-trust law, the company said in a statement on Monday.

On October 3, 2012, the Lithuanian Energy Ministry sent an arbitration request to the Arbitration Institute of the Stockholm Chamber of Commerce against Gazprom. The Energy Ministry stated that the Russian company had violated the contract with Lietuvos Dujos, by not setting fair prices for the natural gas supplied to the country, and demanded compensation in the amount of 5 billion litos, which amounted to 91.8 billion rubles ($1.4 bln) as for March 31, 2015.

Gazprom has not agreed with the terms of the arbitration and on November 9, 2012 filed an arbitration response with the Stockholm court.

After the group of arbitrators was formed, the hearing on the merits of the case took place between July 1-9, 2015. As a result of the hearing, both parties have until September 30, 2015 to submit further written statements on the basis of the analysis of testimonies and documents presented.

On April 22, the European Commission (EC) sent an official list of claims within the European antitrust investigation that was launched in 2012 against Gazprom on the basis of complaints of Lithuanian authorities to the EC on September 4, 2012.

The investigation was carried out in the Baltic States, Poland, Czech Republic, Slovakia, Hungary and Bulgaria. According to European Union competition commissioner Margrethe Vestager, Gazprom groundlessly hiked gas prices for Latvia, Lithuania, Estonia, Poland, Bulgaria, Vestager said that the gas price Gazprom set for these five EU states is 40% higher than the gas price set for other countries.

Verstager also said that Gazprom’s formula of linking gas prices to oil prices does not correspond with the EU norms. Verstager then said that Gazprom had 12 weeks to respond to official list of claims by the EC, which would bring the date to mid-July 2015.

"The EC fully respects Gazprom right for defense and will carefully consider its comments before making a decision," she said.

At the same time she said that Gazprom is extremely important to Europe.

The problem is only with certain commercial practices of the company, Vestager said.

The commissioner said it is preliminary to speculate on the amount of a possible fine for Gazprom.

First Gazprom should respond to the EU claims and the European Commission should consider the response, she said.

She said that in case the parties don’t settle the conflict, the sum of a possible penalty for Gazprom will be calculated in compliance with rules set for all companies. Under the European law, the penalty for violation of the antimonopoly regulations may reach 10% of the annual turnover of the company in the market, she said.

A source close to the EU institutions told TASS that the EC antimonopoly investigation against Gazprom may end without charging any penalties.

"If Gazprom and the EC manage to find an acceptable (in terms of EU norms) way to change the company’s problem business strategies in Europe, no penalty will be needed", the source said.

Gazprom said that it considers the EC claims to be ungrounded.

In its statement the gas giant said that it fully observes all the norms of the international law and of the countries where it is operating.

The principles Gazprom uses for setting gas prices are in compliance with the standards which are used by other gas producers and exporters, Gazprom said.

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