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Binding Decision on Gazprom Commitments Proposed by the Latter in order to Address Competition Concerns has been Dismissed by the General Court

The General Court of the European Union (“the General Court”) published a press release on the 2nd of February 2022 on the Judgment in Case T-616/18.

The General Court dismisses the action brought against a decision by the European Commission (“the Commission”) to make binding on Gazprom commitments proposed by the latter in order to address competition concerns raised by the former in relation to the national markets for the upstream wholesale supply of gas in the countries of eastern and central Europe.

 

  1. The General Court rejects the plea alleging that the Commission accepted the final commitments even though they do not address the Yamal objections.

Even if Gazprom had attempted to increase its control over the management of investments regarding the Polish section of the Yamal pipeline, the fact remains that, at the stage of approving the final commitments and in accordance with the certification decision, it was Gaz-System that exercised decisive control over those investments and that, in addition, certain large-scale investments relating to that section had been implemented.

Having regard to the discretion enjoyed by the Commission in the context of accepting commitments under Article 9 of Regulation No 1/2003, that institution was entitled to accept the final commitments, even though they do not include any measure addressing the Yamal objections.

Nor did the Commission, in accepting the final commitments, despite the absence of commitments relating to the Yamal objections, infringe the principle of sincere cooperation. In that regard, the General Court rejects the claim that the Commission has prevented the national competition authorities and the national courts from taking action against the practices covered by those objections. While those bodies may not take decisions that would run counter to the contested decision, the Commission did not find that no infringement of EU competition law had taken place. Consequently, that decision is without prejudice to the power of the national competition authorities and the national courts to take steps as regards Gazprom’s conduct in relation to the Yamal objections and their power to apply Articles 101 and 102 TFEU.

  1. The General Court rejects the plea calling into question the fact that the Commission accepted the final commitments although those commitments did not adequately address the objections concerning pricing practices.

Gazprom undertook to introduce, in gas supply contracts of at least three years’ duration entered into with its clients in the five countries concerned, a new procedure for revising the price formulas that determine contractual rates. That new procedure stipulates in particular that those formulas are to be in line with the pricing guidelines included in those commitments and provides for the possibility to refer possible disputes on that issue to an arbitration tribunal established within the European Union. According to the General Court, the Commission did not commit a manifest error of assessment in that regard, including in so far as it accepted a commitment that provided for that new revision procedure rather than imposing an immediate change to the pricing formulas in the contracts concerned.

Nor did the Commission err in law in finding in the contested decision that an arbitration tribunal established within the European Union would be obliged to respect and apply EU competition law. In its judgment in Eco Swiss, 7 the Court of Justice confirmed that Articles 101 and 102 TFEU are public policy provisions which must be applied by national courts of their own motion, those courts being required to grant an application for annulment of an arbitration award if they consider that that award is contrary to those articles. In the light of those considerations and since Regulation No 1/2003 concerns the implementation of Articles 101 and 102 TFEU, the General Court rules that national courts may also grant an application for annulment of an arbitration award if they consider that that award is contrary to a commitment’s decision adopted under Article 9 of Regulation No 1/2003.

 

  1. The General Court rejects the plea calling into question the fact that the Commission accepted the final commitments although those commitments did not adequately address the objections concerning territorial restrictions.

According to the General Court, the Commission did not commit a manifest error of assessment in that regard, including in so far as concerns the commitment to establish a mechanism to change gas delivery points.

 

  1. The General Court rejects the plea that the Commission disregarded the energy policy objectives of the European Union, as set out in Article 194(1) TFEU.

 

  1. As regards purported breaches of procedure connected with the handling of the Yamal objections, the Commission, according to the General Court, committed no such breach during its consultation with the Advisory Committee on Restrictive Practices and Dominant Positions provided for by Article 14 of Regulation No 1/2003.

 While consultation with the Advisory Committee is an essential procedural requirement, there can be no question in the present case of conduct on the part of the Commission that prevented that committee from delivering its opinion in full awareness of the facts nor, therefore, of an infringement affecting the legality of the contested decision. In that respect, the General Court also rejects the applicant’s argument that the Commission misled the interested parties during the market consultation.

  1. The General Court rejects the applicant’s arguments alleging infringement of various procedural rights in the handling of its complaint of 9 March 2017 reporting various purportedly abusive practices by Gazprom which overlapped to a large extent with the concerns set out in the statement of objections.

 

The General Court states that the opening of separate proceedings to deal with the complaint cannot deprive the applicant of the enjoyment of its right as a complainant to receive a copy of the non-confidential version of the statement of objections and to make known its views in writing in the context of the commitment’s procedure.

You can reach the full text of the press release here.

Kind regards,

Zumbul Attorneys at Law

info@zumbul.av.tr