War of words over Gazprom

On Wednesday, European Competition Commissioner Margrethe Vestager accused Gazprom of extracting premiums in Central and Eastern Europe, saying the company abused its position in Poland, Hungary, the Czech Republic, Slovakia, Lithuania, Estonia, Latvia and Bulgaria.

Vestager said Gazprom had used its continued dominance in former Soviet client states to hike prices by as much as 40 percent. She said that Gazprom had also insisted on contracts barring customers from selling gas across borders, which she described as a hindrance of free markets that broke EU law.

"We find that Gazprom may have built artificial barriers preventing gas from flowing from certain Central-Eastern European countries to others, hindering cross-border competition," Vestager said.

Gazprom dismissed the accusations as "unfounded," with a representative saying that company officials expect a resolution at a political level - though Vestager has called the case "not political." Russian Foreign Minister Sergei Lavrov dismissed the accusations as an "absolutely unacceptable" bid to apply EU rules retroactively to contracts signed by Gazprom, which supplies 30 percent of the bloc's petrol.

'Blackmail'

Formerly the Danish economy minister, Vestager - who last week announced similar charges against Google - said Gazprom had also created an obstacle to EU efforts to supply Ukraine, where US and European officials have accused Russia of interfering in a civil war and where the company has already cut off deliveries twice in the past decade. Another set of charges related to pressure put on Poland and Bulgaria to invest in pipelines according to priorities dictated by Gazprom.

"The era of Kremlin-backed political and economic blackmail draws to a close," Lithuanian President Dalia Grybauskaite said.

Gazprom has 12 weeks to respond to the charges, and Vestager stressed that a negotiated settlement under which the company would amend its practices remained possible. Without a deal, she has the power to fine companies up to 10 percent of their annual sales - a potential penalty in Gazprom's case of $10 billion (9.3 billion euros).

Russia has frequently used Gazprom as a sort of oil-infused diplomatic ambassador, and recently company officials have been attempting to negotiate an energy pact with the EU outsider Greece.

mkg/bk (Reuters, AFP, dpa, AP)