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14 04 2017

The Supreme Administrative Court of Lithuania (Court) denied Gazprom’s (Company) application to renew court proceedings and upheld the Competition Council’s decision, according to which the Company breached merger condition.

In 2004 the Council cleared the merger whereby the Company acquired AB Lietuvos dujos shares on condition that it would not prevent Lithuanian buyers to purchase natural gas from other suppliers. Having received the complaint from AB Lietuvos energijos gamyba, in 2012 the Council opened an investigation. The Council‘s experts found that the Company‘s refusal to negotiate with AB Lietuvos energijos gamyba on the natural gas swap agreement for 2013–2015 breached the merger condition envisaged in the clearance of 2004. For the breach the Council fined the Company EUR 35.65 million.

The Council notes that the obligation to comply with the merger condition determined the authority’s decision to clear the merger. The clearance required the Company to refrain from creating obstacles for Lithuanian buyers to purchase natural gas from other suppliers. However, the Company’s refusal to negotiate natural gas swap agreement deprived AB Lietuvos energijos gamyba of a possibility to purchase natural gas from an alternative supplier at a lower price, which might have resulted in a higher price for electricity and heat production by AB Lietuvos energijos gamyba.

The Company appealed the Council‘s decision of 2014 to Vilnius Regional Administrative Court. Having its appeal refused, the Company appealed the decision of Vilnius Regional Administrative Court to the Supreme Administrative Court. On 22 December 2016 the latter Court upheld the Council’s decision and the imposed fine. The Company tried to renew court proceedings, however, the Company‘s application was denied.

The ruling of the Court is final and not subject to appeal.

Last updated: 10 07 2017