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Office of Competition and Consumer Protection

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Nord Stream 2 - President of UOKiK imposes penalty on Gazprom

< previous | next > 03.08.2020

Nord Stream 2 - President of UOKiK imposes penalty on Gazprom
  • President of UOKiK Tomasz Chróstny has imposed a penalty of PLN almost 213 mln on Gazprom for failure to cooperate in the investigation conducted in relation to the construction of Nord Stream 2 gas pipeline.
  • Such an obligation arises out of the European legislation on which the Polish Act on Competition and Consumer Protection is based.

The penalty imposed on Gazprom is related to the proceedings conducted with regard to the creation of a consortium financing the construction of Nord Stream 2 gas pipeline without a required consent of the President of UOKIK. The Authority has made allegations in this case against six companies: Gazprom from Russia, Engie Energy from Switzerland and four companies from Nederlands: Uniper, OMV, Shell and Wintershall. In the course of the proceedings, the Authority requested documents that are of significance to the case from Gazprom as well, however, the company refused to provide information that is important to the pending proceedings.

Based on the existing provisions, at the beginning of the year, we requested Gazprom to provide us with contracts concluded by his subsidiary with other companies financing the construction of Nord Stream 2. Despite its legal obligation to cooperate with the Authority, the company failed to provide such information, even after the proceedings in relation to failure to cooperate, which should have been a warning for the company, were initiated in May. Violation of the laws of Poland, a Member State of the European Union, will result in financial sanctions provided for in such laws. To my mind, it is an intentional act, the aim of which was to obstruct the ongoing proceedings. Therefore, I have decided to impose a penalty of PLN almost 213 mln on Gazprom. It s a maximum sanction provided for by law for failure to provide information requested by the Authority, which constitutes an equivalent of EUR 50 mln, says President of UOKiK, Tomasz Chróstny.

The obligation to obtain a consent of the Authority to implement a concentration by foreign companies as well as the obligation to cooperate with the Office and provide information and documents requested arises out of the European legislation on which the Polish Act on Competition and Consumer Protection is based. 

The documents requested by the Authority were primarily gaseous fuel transmission, distribution, sale, supply and storage agreements. The intentional nature of the company’s actions is reflected by the fact Gazprom did not even request a consent to providing information to the Ministry of Energy of Russia. In this country, companies of strategic importance must obtain such approval before providing information to e.g. a foreign institution. Failure to request such a consent implies that Gazprom did not even intend to reply to the request of the Authority at all.

Penalty for Engie Energy in 2019

Failure to cooperate with the Authority in the course of proceedings regarding the unlawful establishment of a company financing Nord Stream 2 is not a rule. Although last year, the Authority imposed a penalty of PLN 172 mln on Engie Energy, the remaining four entrepreneurs cooperate and provide documents and information requested by the President of the Office for Competition and Consumer Protection.

Nord Stream 2 case in UOKIK – the story of an anti-trust investigation

In 2015, UOKiK received an application filed by six companies for approval to create a joint venture responsible for the construction and operation of Nord Stream 2. In 2016, the Office voiced its concerns regarding the concentration, in which it noted that the planned transaction could lead to the restriction of competition and presented its reservations. The companies withdrew their application, which in practice meant that they were prohibited to perform a merger. Meanwhile, not long after the information that the would-be parties to the transaction had signed an agreement for financing gas pipeline started to appear in the media. Therefore, proceedings against Gazorom and its five trading partners regarding the execution of the transaction without obtaining approval from the Authority were initiated.

Undoubtedly, the attitude of Gazprom has hindered our proceedings, but Russian entrepreneur has failed to block them. We hold sufficient evidence and are finishing its analysis. This means that we are coming closer to the end of unprecedented proceedings regarding the creation of a consortium responsible for financing Nord Stream 2 without obtaining consent of the Authority, says President of UOKiK Tomasz Chróstny.

For violating the prohibition against concentration without obtaining approval from the Authority, the companies are liable to a fine equal of up to 10 percent of their annual turnover. In addition, if the concentration was implemented and it is no longer possible to restore competition on the market, the Authority may order the total or partial disposal of the company’s assets and shares granting control over the company, and even the dissolution of the company over which the companies concerned hold control.

Attached files

 

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