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Friday, September 14, 2012

The Commission vs.Gazprom

Professor Alan Riley has a thoughtful article in Wall-Street Journal - http://online.wsj.com/article/SB10000872396390443921504577643173700034222.html - on the stakes of the recent investigation opened by the European Commisson into EU dealings of the giant Gazprom.
This investigation, like any other investigation of the European Commission, lies on real (and worrisome) antitrust issues. The opening of this case, like any other investigation, does not mean that Gazprom is guilty but that its contracts require a closer look. In the same line of arguments, I would add that Gazprom would be better off if it accepts that DG Competition does not operate with preconceptions and it provides all the necessary data to the Commission.

If Gazprom will decide to raise the veil, this strategy will go counter to its interests in EU as it may be regarded as an admission that something is rotten in its EU business and may accelerate the development of alternative sources of supply.
What is very interesting is that, in fact, the European Commission already won this case - just by starting putting questions about the "king's clothes", how true are these and what impact the behavior of the king has in the European markets.
These contracts exist from such a long time that people take them as granted, like being part of the business tradition. Their clauses came into discussion rarely and this happened rather accidentally and in moments of crisis
The success of the investigation means that, notwhitstanding its conclusions, at the outset the life  in EU will not be the same for Gazprom.

Update: The European Parliament adopted on 13 September 2012 a new legislation aimed at better coordination of the energy deals with third countries - see more details at http://www.europarl.europa.eu/news/en/pressroom/content/20120907IPR50830/html/Better-coordinated-EU-external-energy-policy