Estonia should claim Gazprom damages says Reform Party leader

Kaja Kallas.
Kaja Kallas. Source: Sander Koit/ERR

Kaja Kallas, leader of the main Estonian opposition Reform Party (Reformierakond), has said that Estonia should claim for damages from Russian energy company Gazprom for charging above-market-rate levels for natural gas supply.

This follows an announcement by the European Commission announced last Thursday, 24 May, that whilst it is not going to fine the energy giant, it will nonetheless impose obligations addressing the Commissions concerns, also aimed at facilitating the free flow of natural gas from Gazprom at competitive prices in the Central and Eastern European (CEE) countries.

"The European court has found that Gazprom has abused its dominant market position by asking for inflated prices''. said Ms Kallas today, Tuesday, whilst noting that ''There have been plenty of cases like this where money paid in excess has been reclaimed.''

Infringement on Estonian soil might be tried in Estonian court

However the solution need not lie merely at the European Commission's doors; Estonia can also take a more proactive role, she said, by actually taking Gazprom to court in an Estonian Court.

"Essentially this judgement [from the European Commission] serves as the basis for confirming that Gazprom have abused its dominant market position, and harm has occurred as a consequence. As a result, damages could be claimed," Kallas said.

Since the pricing infringements happened on Estonia soil, taking the matter to court in Estonia is viable, it is reported.

European Commission measures against Gazprom

Under the European Commission decision, Gazprom are obliged to remove any restrictions placed on customers to resell gas cross-border and enable gas flows to and from those EU states of the CEE region which are still cut off from other member states due to the lack of gas supply inter-connectors, namely the three Baltic states and Bulgaria.

Gazprom are also required to ensure that gas prices reflect the price level of competitive Western European gas markets, especially at liquid gas hubs, and prevent Gazprom from acting on any advantages concerning gas infrastructure which it may have hitherto obtained from customers by leveraging its market position in gas supply.

Should Gazprom fail to meet any of these obligations, the Commission can impose a fine of up to 10 per cent of Gazprom's worldwide turnover without having to prove an infringement of EU antitrust rules had taken place.

Margrethe Vestager, EU Commissioner in charge of competition policy, is quoted on Kaja Kallas' personal blog as having signalled that together with the European Court of Justice (ECJ) judgement on Spanish energy company Gasorba, which stated that member states may still rule on binding commitments accepted by the European Commission, a useful precedent has been set on which governments, businesses and even citizens can base damage claims against Gazprom.

"Any companies doing business in Europe have to respect European rules on competition, no matter what their origin. Today's decision removes obstacles, created by Gazprom, which stand in the way of the free flow of gas in Central and Eastern Europe. But more than that – our decision provides a tailor-made rule book for Gazprom's future conduct," Ms. Vestager said.

The Lithuanian example

Kaja Kallas also pointed to the example of another Baltic state, Lithuania, in how to deal with Gazprom from the viewpoint of an individual sovereign state.
"Maybe we should learn from Lithuania how to stand up for our rights," she noted in her blog (Lithuania had made it clear throughout the lengthy process that it wants the damage caused by Gazprom to be compensated for and had sought that damage be set out also in the Commission's decision, whereas Estonia had sought the more modest remedy of a fine, according to Ms. Kallas' blog).

Nevertheless there are dissenting voices from amongst the European community of nations.

Some people have pointed to Google's 2€.4 billion fine from the European Commission, in addition to Qualcomm's €997 million fine, both for competition breaches similar to Gazprom's but which stand in contrast to the latter's lack of a fine from the Commission so far.

Gazprom is the dominant gas supplier in a number of CEE countries. In April 2015, the Commission sent the company a statement of objections. It set out the Commission's preliminary view that Gazprom had breached EU antitrust rules by pursuing an overall strategy of differentiating gas markets along national borders in eight member states: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

It is argued that the strategy may have enabled Gazprom to charge higher gas prices in five CEE countries, that is Bulgaria, Estonia, Latvia, Lithuania and Poland.

Editor: Andrew Whyte

Source: BNS

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