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EU charges Russia's Gazprom, alleging price gouging

Rogue Valley

Rogue Valley

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[url="http://www.reuters.com/article/2015/04/22/eu-russia-gazprom-idUSL5N0XI4MA20150422:]EU charges Russia's Gazprom, alleging price gouging[/url]

Reuters
Apr 22, 2015

BRUSSELS - The European Union launched a legal attack on Gazprom on Wednesday, stoking tension with Moscow as it accused the Russian gas giant of overcharging buyers in Eastern Europe and hindering competition. The Kremlin appeared to take a conciliatory tone, saying it hoped for compromise and an impartial stance from EU regulators.

The EU's new antitrust chief, Margrethe Vestager, who a week ago announced a similar market abuse prosecution against U.S. tech giant Google, said state-controlled Gazprom was using its continued dominance in Moscow's old Soviet client states to hike prices by as much as 40 percent over the norm. It could do so, she said, by insisting on contracts that bar customers selling on gas to others, notably across borders, which she described as a hindrance of free markets that broke EU law. It has also been an obstacle to EU efforts to supply Ukraine. Another set of charges related to pressure put on Poland and Bulgaria to invest in pipelines according to priorities dictated by Gazprom.

"The era of Kremlin-backed political and economic blackmail draws to a close," Lithuanian President Dalia Grybauskaite told Reuters in welcoming charges which EU officials said were based on evidence going back to when the eight countries affected joined the bloc, most of them in 2004.
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Hopefully, Moscow's usage of energy as a wide-ranging tool of economic blackmail and coercion will be dismantled in court.
 
Simpleχity;1064555830 said:
[url="http://www.reuters.com/article/2015/04/22/eu-russia-gazprom-idUSL5N0XI4MA20150422:]EU charges Russia's Gazprom, alleging price gouging[/url]


Hopefully, Moscow's usage of energy as a wide-ranging tool of economic blackmail and coercion will be dismantled in court.
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Though, I am certainly the last to like the dependence that Schröder et alias plunged Europe into by sourcing so much of its energy from Russian pipelines instead of LNG and oil from the market, I think that we should step back and consider, what this means for any contract made with EU members and/or the EU. When the contracts were signed with Gazprom it was well known by all partners, what the contracts stipulated and everyone knew that Gazprom is a monopolist. So it does seem less than disingenuous to now come and complain that it uses monopolistic pricing in the contracts the Europeans signed. In effect they are acting as though it were a legal issue, which it is not.

This means that rule of law is not their way. This confirms many of my experiences in Europe over the years. Beware of contracts signed in Europe. You will not win in court.
 
Simpleχity;1064555830 said:
[url="http://www.reuters.com/article/2015/04/22/eu-russia-gazprom-idUSL5N0XI4MA20150422:]EU charges Russia's Gazprom, alleging price gouging[/url]

Hopefully, Moscow's usage of energy as a wide-ranging tool of economic blackmail and coercion will be dismantled in court.
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Unless the EU has secured a replacement for Gazprom I wouldn't expect much to come out of this. Putin isn't above turning off the spigots to protest any court decision.
 
joG said:
Though, I am certainly the last to like the dependence that Schröder et alias plunged Europe into by sourcing so much of its energy from Russian pipelines instead of LNG and oil from the market, I think that we should step back and consider, what this means for any contract made with EU members and/or the EU.
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It means that Russia should sell energy according to formula that are economically fair and use the same supply/delivery metrics for everyone ... rather than the political carrot and stick approach it now employs. As a state-owned monopoly, Gazprom colludes with the Kremlin to deliver energy on a selective economic/political basis rather than strictly on a systemic economic basis. Countries that Moscow attempts to sway politically obtain a favorable offer whereas countries that Moscow wishes to coerce/punish get a terrible take-it-or-leave-it deal. As I understand it, such dictatorial and selective practices by a corporate monopoly are illegal under EU law.

Gazprom's conciliatory tone and compromise-request suggest that it is well aware that its selective policies constitute an illegal abuse of monopolistic power and position.
 
Simpleχity;1064556241 said:
Gazprom's conciliatory tone and compromise-request suggest that it is well aware that its selective policies constitute an illegal abuse of monopolistic power and position.
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Naive talk.
 
jmotivator said:
Unless the EU has secured a replacement for Gazprom I wouldn't expect much to come out of this. Putin isn't above turning off the spigots to protest any court decision.
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Russia is an economic one-trick-pony ... energy. Putin can''t afford to turn off the energy spigot, especially now that energy demands are falling as continental temperatures increase. But I agree that Europe should seek alternative energy sources to minimize future attempts at political coercion and economic blackmail.
 
Simpleχity;1064556275 said:
Russia is an economic one-trick-pony ... energy. Putin can''t afford to turn off the energy spigot, especially now that energy demands are falling as continental temperatures increase. But I agree that Europe should seek alternative energy sources to minimize future attempts at political coercion and economic blackmail.
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China is always looking for new sources of oil. Russia couldn't sustain such an agreement for very long, but long enough to make it hurt the EU
 
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