The EU’s Proceedings Against Gazprom And Their Repercussions On EU Competition Law

The European Union (EU) is concerned with the Russian Federation's (RF) policy of using natural gas resources as an instrument of expanding its influence over the EU Member States through the state-owned giant Gazprom, a super dominant energy company, operating in the EU with assets in upstream, midstream and downstream energy markets. On 4 September, 2012, the European Commission announced that it has initiated proceedings against Gazprom on the grounds that the Russian giant abused its dominant position in several EU energy markets through practices such as oil price indexation, take-or-pay clauses, refusing third party access rights, etc. In response, the RF enacted blocking legislations to prevent Gazprom and its subsidiaries in the EU from complying with the enforcement decisions that would be taken by the Commission. The Commission's proceedings constituted an extraterritorial application of EU Competition Law to certain practices perpetrated by Gazprom in its domicile, St. Petersburg, Russia. Blocking legislations indicated that the RF sought to provide to Gazprom, a legal basis, the principle of non-interference, the company would rely on in dismissing the enforcement decisions taken by the Commission. On 24 May, 2018, the Commission imposed binding obligations on Gazprom to ensure, inter alia, that natural gas provided by the Russian giant was priced at competitive levels through employing indices established in the EU. Even though the Commission's decision was not challenged by Gazprom before the EU courts, the arguments raised by the parties prior to the decision had serious legal implications as to the extraterritorial application of EU competition law to market practices that were part of a political agenda.