Brussels sends strong message of control through Gazprom and Google investigations

In the last two weeks, the European Commission (EC) has sent strong signals that it is prepared to take on the biggest international conglomerates for potential infringements, whether they are based in Europe or not. Two weeks ago the EC sent a Statement of Objections to Google that alleged the company has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA). This week the EC also sent a Statement of Objections to Gazprom, the world's largest gas producer that is majority owned by the Russian state, alleging that some of its business practices in central and eastern European gas markets constitute an abuse of its dominant position and are in breach of EU antitrust rules.hideBoth cases suggest that risk managers at leading European and international corporations should not delude themselves that they are safe from corporate governance and competition investigations, even if they are huge employers and strategic suppliers. The Gazprom case surely cannot be unrelated to the ongoing debate between the EC and Russia over the supply of gas to the EC via Ukraine, which of course continues to be beset by political turmoil. The Commission recently carried out an investigation into the way that Gazprom operates and said its preliminary view is that Gazprom is breaking EU antitrust rules by pursuing an overall strategy to partition central and eastern European gas markets, for example by reducing its customers' ability to resell gas cross-border. The EC said that this strategy may have enabled Gazprom to charge unfair prices in certain member states. "Gazprom may also have abused its dominant market position by making the supply of gas dependent on obtaining unrelated commitments from wholesalers concerning gas transport infrastructure," claimed the EC. Gazprom now has 12 weeks to reply to the Statement of Objections and can also request an oral hearing to present its arguments, said the Commission. EU Commissioner in charge of competition policy, Margrethe Vestager, said: "All companies that operate in the European market-no matter if they are European or not-have to play by our EU rules. I am concerned that Gazprom is breaking EU antitrust rules by abusing its dominant position on EU gas markets. We find that it may have built artificial barriers preventing gas from flowing from certain central eastern European countries to others, hindering cross-border competition. Keeping national gas markets separate also allowed Gazprom to charge prices that we at this stage consider to be unfair. If our concerns were confirmed, Gazprom would have to face the legal consequences of its behaviour." Last week, the European Commission sent a Statement of Objections to Google that alleged the company has abused its dominant position in the market for general internet search services in the European Economic Area (EEA) by 'systematically favouring' its own comparison shopping products in its general search pages results. The Commission said its preliminary view is that such conduct infringes EU antitrust rules because it 'stifles' competition and 'harms' consumers. The Commission has formally opened this antitrust investigation into Google's conduct with the mobile operating system Android, the widely-used open-source operating system that Google has driven, which is used by the majority of smartphone and tablet manufacturers. The commission said that its investigation will focus on whether Google has entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices. Ms Vestager said: "The Commission's objective is to apply EU antitrust rules to ensure that companies operating in Europe, wherever they may be based, do not artificially deny European consumers as wide a choice as possible or stifle innovation." She added: "In the case of Google I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules. Google now has the opportunity to convince the Commission to the contrary. However, if the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe." Ms Vestager continued: "I have also launched a formal antitrust investigation of Google's conduct concerning mobile operating systems, apps and services. Smartphones, tablets and similar devices play an increasing role in many people's daily lives and I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company." The message is clear for Gazprom and Google. Be successful, create jobs but don't threaten to wrest control of markets or the EC will come down hard on you. It will be fascinating to see how these cases pan out.

Brussels sends strong message of control through Gazprom and Google investigations

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