UOKiK President’s decision confirms that Nord Stream 2 harms competition in gas market
UOKiK President’s decision confirms that Nord Stream 2 harms competition in gas market
Date of publication: 12.10.2020

Decision of the President of the Office of Competition and Consumer Protection (UOKiK) to impose a fine of PLN 29 billion on Gazprom and a total of PLN 234 million on the business partners engaged in Nord Stream 2 project confirms that the participants acted not only to the detriment of competition in the gas market, but also circumvented the competition laws concerning mergers. PGNiG agrees with the position of the UOKiK President.

In 2015, Gazprom, Shell, Uniper, Engie, OMV and Wintershall filed a merger application with the UOKiK President for consent to establish a joint venture – the operator of the Nord Stream 2 gas pipeline. The UOKiK President issued objections regarding the application, pointing that the construction of Nord Stream 2 posed a threat to competition. As a result, the application was withdrawn, but the companies did not give up their cooperation and – in place of the previous consortium agreement – concluded agreements on the financing of a gas pipeline operator and proceeded with the project.

From the very beginning of Nord Stream 2 project, PGNiG pointed to its negative impact on competition and security of gas supplies in Central and Eastern Europe, particularly on the Polish market. The company indicated the harmful effect of the Nord Stream 2 project on competition in, among others, the antitrust proceedings conducted by the European Commission against Gazprom, the derogation proceedings before BNetzA, and in the positions submitted to the UOKiK President as part of antitrust proceedings, including the proceedings concluded with the today’s decision of the UOKiK President.

Similarly to the UOKIK President, PGNiG perceives the change of the Nord Stream 2 financing model as an attempt to bypass the objections raised by the UOKiK President in 2016 to the concentration consisting in the establishment of Nord Stream 2 AG. In its position submitted to the UOKiK President, PGNiG argued that, considering all the key features of the transaction, as a result of signing and proceeding to perform the agreements on financing the construction of Nord Stream 2, the intended concentration in fact materialised and a joint venture was established. According to the information presented at the UOKiK President’s conference, the UOKiK President recognized PGNiG’s arguments.

PGNiG considers that the decision of the UOKiK President will significantly contribute to protecting competition in the gas market in Europe. The decision shows that any actions aimed at circumventing the law and harming competition are unacceptable, and that all businesses, regardless of the country they are based in, must act in accordance with the law and comply with their legal obligations. In this context, it is also important to recall the efforts, as yet unsuccessful, made by Gazprom and its business partners to convince the Member States and the EU Institutions that Nord Stream 2 is not subject to the European Union’s Third Energy Package. This shows that Nord Stream 2 is not just an ordinary business venture, but a project founded on the assumption that the laws of the Member States or the laws of the European Union can be circumvented.

PGNiG is of the opinion that it is necessary to stop further work on the construction of the Nord Stream 2 gas pipeline, which is a project contrary to the Treaty’s principle of solidarity in energy matters and detrimental to security of supplies and competition.

In the Company’s view, the Nord Stream 2 project participants should, implementing today’s decision of the UOKiK President, terminate the Nord Stream 2 financing agreements.

Meanwhile, PGNiG declares that it will use all available legal means to counteract the adverse consequences of the Nord Stream 2 project.

Source: PGNiG

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