SUPREME ADMINISTRATIVE COURT UPHELD COUNCIL‘S DECISION IN GAZPROM CASE

On December 22 the Supreme Administrative Court of Lithuania (hereinafter – SACL) upheld the Competition Council‘s (hereinafter – Council) decision of 2014 whereby Gazprom  received a fine of more than EUR 35 million – Gazprom created obstacles for AB Lietuvos energijos gamyba to purchase natural gas from other supplier.

In 2004 the Council cleared the merger by which Gazprom acquired AB Lietuvos dujos shares on condition that Gazprom would not prevent Lithuanian buyers to purchase natural gas from other suppliers. Having received the complaint from AB Lietuvos energijos gamyba, in 2014 the Council opened the investigation. The Council‘s experts found that Gazprom’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.

The Council notes that the obligation to comply with the merger condition determined the Council‘s decision to clear the merger by which Gazprom acquired AB Lietuvos dujos shares. The clearance required Gazprom to refrain from creating obstacles for Lithuanian buyers to purchase natural gas from other suppliers. However, Gazprom‘s refusal to negotiate the 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.

Gazprom appealed the Council‘s decision of 2014 to Vilnius Regional Administrative Court, and later on to the SACL.

The SACL stated that the purpose of the merger condition was to prevent Gazprom from abusing its dominant position and restricting the ability of Lithuanian buyers to purchase natural gas from alternative suppliers. Gazprom, however, failed to meet the condition. Creating obstacles for purchasing natural gas is the restriction of both competition in the Lithuanian natural gas market and the buyers‘ ability to purchase natural gas from other suppliers.

Gazprom will have to pay the EUR 35 651 268,54 fine imposed by the Council, as well as the interest.