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Gazprom-Case Study

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1. Introduction On 4 September 2012, the European Commission (EC) antitrust branch sent a Statement of Objections to Gazprom, the Russian state-controlled energy giant, for violating European Union (EU) competition rules. According to the Commission’s preliminary view, the company aimed to partition Central and Eastern European gas markets, in order to abuse its domimant position in the region. EC’s formal proceedings state three potential antitrust practices: preventing cross-border flows of gas, charging unfairly high prices, and extracting commitments, in return for gas, to keep control over gas transport infrastructure. Even if the statement (2012) of Joaquin Almunia, EC Vice President and Commissioner for Competition, is trustworthy, and this investigation is not for political reasons, proving EC’s preliminary views economically is quite controversial itself. This paper, however, aims to examine the economic background of the Gazprom-case and provide with potential evidence of the company’s responsibility of anticompetitive behavior. After briefly describing the context, this study firstly explains the role of barriers to entry. Secondly, it focuses on definitions such as elasticity, market efficiency and welfare and relates them to the claimed to be “unfair” pricing. Finally, the paper introduces to the …show more content…

By officially proving the presence of unjustified high barriers to entry, abuse of dominant position, lower society welfare, and weak market efficiency, EU can start engaging more in the Central and Eastern European gas markets. Applying the neccessary changes in contracts and encouraging supplier alternatives, the Union can successfully deminish eventual antitrust behaviour, and allow for the European citizens to be able to make a choice, by paying less for

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