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Poland may fine Gazprom over Nord Stream 2 pipeline case

Christian Fernsby |
Poland’s UOKiK watchdog may fine Russian gas producer Gazprom up to 50 million euros ($56 million) due to a lack of cooperation in anti-monopoly proceedings related to the Nord Stream 2 gas pipeline project, UOKiK said.

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UOKiK said in 2018 it charged six companies, including one owned by Gazprom, with financing construction of the pipeline without a legally required permit. It said that in early 2020 Gazprom failed to provide documents relating to the case.

"Gazprom cannot operate above the law and, for that reason, I have initiated proceedings against the company to impose a fine for failure to provide information during the pending investigation," UOKiK President Tomasz Chrostny said in a statement.

Poland sees Nord Stream 2, which would double Russia’s gas export capacity via the Baltic Sea, as a threat to Europe’s energy security, saying it will strengthen Gazprom’s already dominant position on the market, Reuters reported.

Nord Stream 2 is led by Gazprom, with half of the funding provided by Germany’s Uniper and BASF’s Wintershall unit, Anglo-Dutch company Shell , Austria’s OMV and Engie.

Last year, a PLN 172 million fine was imposed on Engie Energy, as it failed to provide the Office information regarding gaseous fuels, including transmission, distribution, sale, deliver and storage agreements.

“It is particularly reprehensible that large, international corporations do not comply with the applicable laws. If the lack of cooperation was intended to slow down the Office in its investigation, I can say that the companies did not achieve their goal. We already have adequate evidence and are nearing the end of our investigation in the case concerning concentration without approval,” says Tomasz Chróstny, President of the Office.

In 2015, the Office 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 information that the would-be parties to the transaction have signed an investment financing agreement started to appear in the media.

Therefore, proceedings against Gazprom and its five trading partners regarding the execution for a transaction without obtaining approval from the Office of Competition and Consumer Protection were initiated.

For violating the prohibition against concentration without obtaining approval from the Office of Competition and Consumer Protection, 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 President of the Office 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.

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