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Gazprom facing the ‘Google’ gallows

GazpromBad news for Russia as Margrethe Vestager, the European Union’s competition regulator accused Russia’s state-owned energy company, Gazprom, of holding Europe to ransom over gas imports.

It’s been a long time coming as the commission has been compiling evidence since September 2011 when its officials raided the offices of Gazprom and its affiliates.

So why has it taken so long? The papers are thought have been ready since 2013. But in an act of reluctance, reminiscent of World War 2, Europe stood back for a few years watching the injustice amongst fears of antagonising Russia, before they gathered the stones to take action.

Andriy Kobolev, the chief executive of Naftogaz, the Ukrainian state gas company, said in January that the EU was afraid of the consequences if it stood up to Gazprom. And it’s easy to see why, with Europe’s reliance on its supply.

But reticent no more. Commission crusader, Vestager, fresh from her victory against Google has decided to press ahead with anti-trust charges after Gazprom’s reluctance to commit to price cuts for customers in eastern Europe.

Ms Vestager stated that “consistent enforcement” of the competition rules was vital for Europe’s hopes of building an energy union, saying:

“Acting decisively against energy companies that harm rivals, block energy flows from one EU country to another or threaten to close the tap can help to deter others”

Among the allegations is that the company imposes restrictions on the ability of such customers to resell gas, while forcing them to enter into long-term “take-and-pay” contracts, obliging them to buy gas whether they need it or not. A second involves its refusal to give rival suppliers access to its distribution pipelines, thus eliminating competition.

Russia has not taken the news well with Vladimir Putin, Russia’s president passing laws in response to stop state companies from passing information to foreign regulators without Moscow’s consent.

Russia won’t take this lying down, that’s for sure. It’s assumed they’ll threaten to cut off supplies to Europe (as they have done previously over the Ukranian crisis).

But don’t be deterred Vestager, this would simply be a case of Russia cutting it’s nose off to spite it’s face. They need Europe just as much as Europe need them. Its time to rebalance the system.