Apr 20th 2015
Thesis: EU’s regulations on Gazprom are necessary to keep the competition policy which set fair rules as well as protect EU consumers.
After taking Econ 444, the European Economy, I can understand the structure of EU and its economic policies better. Among various procedures in EU, “Competition Policy” is one of the most important laws, which was made for protecting European consumers from a corporation abusing the monopolistic power. Also, by punishing those illegal activities, European Commission can bring more competitions into the Europe.
Wall Street Journal says that European Union’s competition regulator plans to file charges against OAO Gazprom, a Russian gas company owned by the Russian government. “The European Commission started a formal investigation into Gazprom’s business practices in some eastern and southern European countries in 2012, saying that it suspected the company of abusing its dominant position in those countries’ natural-gas supply (Wall Street Journal).” Many people argue that this decision is not reasonable because Gazprom is the biggest only gas supplier for the Europe (32.6% of total oil import and 38.7% of total gas import – Wikipedia), so if the relationship gets hurt, the negative results will affect on the whole Europe. Also, they worry about some tensions between Russia and the Europe not only in terms of economics but also of politics.
However, I think regulations on Gazprom are unavoidable and necessary for the EU. First of all, I agree with the statement that Ms. Vestager, a Danish politician who serves as a Member of Parliament, said. “It’s very important for me to make sure that any company in the European market is being faced with the same set of rules and the same effort of enforcement.” Also, since the European Commission was established, it has dealt with various corporations from a giant multinational company like Chiquita to a small company like German local beers brewer, treating them all equally within laws. So, Gazprom cannot be the exception. If the EU didn’t take an action for Gazprom (it completed investigations and already found some obvious evidence), it cannot keep competition rules and apply them to any other firms.
Second, those competition policies were made to protect the EU consumers and encourage fair competition between firms in the Europe market. If the Commission doesn’t accuse Gazprom of market partitioning, market foreclosure and different oil prices (price differentiation), consumers will be charged unfair costs, basically harming the EU’s economy. Some people contend that Gazprom is the largest outside (natural gas) supplier so that EU should not hurt the relationship with it. However, because of its huge size and influence, the European Commission and Court should be more careful monitoring its activities.
There is a saying that “when in Rome, do as the Romans do.” The European Union always set its rules to companies in the EU market regardless of their nationalities. It should apply the same laws to Gazprom now. Gazprom’s case will influence on future possibilities of violating the competition policy and strengthening the EU rules, because it shows that there will be no exceptions.