EU reaches deal with Kremlin-backed energy giant in anti-trust case

The EU on Thursday settled a high-stakes anti-trust case against the Kremlin-backed energy giant, over claims it abused its dominant positon as a gas provider in eastern Europe member states.

With the deal Gazprom avoids billions in fines and offers a rare respite to tensions between the Russia and West that have worsened over Ukraine, the war in Syria and allegations of election meddling by the Kremlin.

The deal comes after Gazprom agreed to benchmark prices in eastern Europe against prices in the rest of Europe, and to drop clauses restricting the re-export of gas by clients.

The decision will infuriate eastern European energy players who fear the dominance of Gazprom and accuse Brussels of favouring the Russian giant with a special deal.

"Today's decision removes obstacles created by Gazprom, which stand in the way of the free flow of gas in Central and Eastern Europe," EU Competition Commissioner Margrethe Vestager told a news briefing in Brussels.

Vestager insisted that the settlement imposed strict "obligations" on Gazprom and "provides a tailor-made rulebook for Gazprom's future conduct."

She said the deal would be "to the benefit of millions of European consumers when they heat their houses or when they cook their food", and to businesses that rely on Gazprom supplies.

'Disappointed and embarrassed'

Germany is understood to be a major backer of the deal as it nurtures special relations with Gazprom, a major national energy provider through the Nordstream pipeline.

Former German chancellor Gerhard Schroeder has maintained close ties to the company and to Russian President Vladimir Putin.

Vestager in March 2017 already gave her approval to commitments made by Gazprom, but a furious response by eastern Europeans had delayed the formal decision.

"We are disappointed that the long-term anti-trust proceedings against Gazprom ended without fines being imposed, with no compensation for companies whose interests were harmed and with only marginal concessions from the Russian monopoly," Konrad Szymanski, Poland's deputy foreign minister, told the Polish PAP news agency.

The EU has been investigating Gazprom since 2011 over claims it abused its dominant position with unfair prices and restrictive terms in eight EU countries, all former satellites of the Soviet empire.

The dispute quickly got caught in the growing discord between the EU and Moscow that began with the conflict in Ukraine and re-emerged most recently with the poisoning of a Russian spy in Britain.

Gazprom's Deputy Chairman Alexander Medvedev said his company was "satisfied" with the commitments and "reaffirms its commitment to comply with them in future".

After the initial deal was announced, Poland's state-run gas firm PGNiG staunchly advocated for tough penalties for Gazprom and can be expected to fight the settlement in court.

"Don't let Gazprom get away with abusing the market," PGNiG CEO Piotr Wozniak wrote on the Politico website after an earlier version of the settlement leaked.

Wozniak said he was "disappointed and embarrassed" by the decision, calling the bloc's "light-handed" treatment of Gazprom "particularly egregious".

The decision could also risk ruffling feathers in th US where tech giants such as Google, Apple and Facebook have been put under intense regulatory scrutiny by the EU and inflicted with major fines.

The White House is also engaged in an aggressive campaign to promote its own natural gas exports, which could have benefited from deepened EU-Gazprom discord.