Lithuania Joins Polish Lawsuit Against EC’s Gazprom Deal

Lithuania said February 27 that it will join a Polish lawsuit against the European Commission (EC) for its failure to fine Russia’s Gazprom for monopolistic activity.

The lawsuit, brought by Polish state-controlled PGNiG, stems from a 2015 assessment in which the EC found Gazprom had violated EU antitrust rules in Bulgaria, Estonia, Lithuania, Latvia, Poland, the Czech Republic, Slovakia and Hungary. Lithuania estimates that overcharging by the Russian company has cost it €1.5bn ($1.7bn).

PGNiG lodged its complaint with the Court of Justice of the European Union (CJEU) in Luxembourg in October. It objects to a settlement struck by the EC with Gazprom in May over charges that it had been abusing its market position in several central and eastern European (CEE) states.

The settlement allowed the Russian gas giant to escape the threat of sanctions that could have equalled 10% of global turnover. In return, Gazprom agreed to several commitments easing contractual restrictions of gas flows across the region.

PGNiG argues that in reaching the agreement, the EC of violated the procedural rules of EU law and that the obligations imposed on Gazprom were inadequate compared with the damages suffered by CEE states.

"Despite nearly six-months validity of the EC's decision of May 2018, Gazprom has not stopped breaking EU law and continues to inflate gas prices with its recipients in Central and Eastern Europe," PGNiG said in a statement as it made the complaint.

Lithuania’s deputy foreign minister Konrad Szymanski confirmed that government in Vilnius has now decided to join the lawsuit. Minister of energy Zigimantas Vaicziunas called the failure of the EC to impose fines a political defeat for Lithuania and others.

"A positive outcome of this case will strengthen our position in the arbitration court in Stockholm," he added, according to the Polish Press Agency.

Alongside Poland, Lithuania has long sought to break Russia’s dominance of gas supply in CEE, introducing the first alternative in the Baltic states in 2015 when it launched an LNG terminal. Vilnius has also fought several arbitration cases against Gazprom. The estimated €1.5bn in losses had until now been presented in the arbitration court in Stockholm as theoretical damage.