On February 2, 2022, the General Court annulled a Commission decision rejecting an antitrust complaint against Gazprom, due to deficient Commission reasoning.[1]
Background
In 2015, the Commission launched a formal investigation into a potential abuse of dominant position by Gazprom in the wholesale supply of gas in Central and Eastern Europe (including Poland), through the imposition of unfair prices and gas export bans.[2] In March 2017, Polish gas company PGNiG[3] submitted a complaint to the Commission with a new allegation that Gazprom made its gas supply contract with PGNiG subject to certain conditions, including veto rights over Gaz System, which owns the infrastructure of the Polish section of the Yamal gas pipeline.[4]
In January 2018, the Commission informed PGNiG that it intended to reject the complaint and asked it to submit any observations (“Intention Letter”). PGNiP replied that it was not privy to all the information on which the Commission’s preliminary position was based. In April 2019, the Commission formally rejected the complaint on two grounds: (i) the possible applicability of the state compulsion defense, which excludes from antitrust scrutiny practices imposed, rather than merely encouraged, by national authorities or legislation;[5] and (ii) a decision adopted by the Polish Regulatory Authority certifying Gaz System as an independent system operator (“Certification Decision”), indicating that Gazprom had no influence over the pipeline and was thus not in a position to implement the alleged abusive conduct.[6]
Shortly after this, in May 2018, the Commission closed its main Gazprom investigation, following Gazprom’s binding commitments to remove the contractual export ban and to set up a tool allowing customers to verify that their gas prices are competitive compared to price levels prevailing in Western European gas markets.[7]
PGNiG appealed to the General Court, arguing that the Commission had violated its right to information and right to be heard[8] because it rejected the complaint based on an element that was not expressly mentioned in the Intention Letter: the possible applicability of the state compulsion defense.
The General Court’s judgment
The General Court annulled the Commission decision in its entirety. The General Court found that the Intention Letter did not expressly address the state compulsion defense,[9] precluding PGNiG from putting its argument forth. The Commission also erred in relying on the Certification Decision, which endorsed Gaz System’s independence, but had not been correctly executed following a threat by the Russian Government to cease gas supply to Poland.
This is the first judgment in over a decade annulling the Commission’s rejection of a complaint due to insufficient reasoning, and was followed by a similar judgment issued just days later (see Sped-Pro below). Both judgments are a reminder that the Commission’s wide margin of discretion in handling complaints is counterbalanced by the parties’ procedural rights and the Commission’s obligation to state reasons. And they follow a stream of EU Court judgments, particularly in the cartel area, annulling Commission decisions on account of procedural deficiencies.[10]
Editors: Conor Opdebeeck-Wilson and Thorsten Schiffer
[1] Polskie Górnictwo Naftowe i Gazownictwo S.A. v. Commission (Case T-399/19), EU:T:2022:44.
[2] Upstream gas supplies in Central and Eastern Europe (Case COMP/AT.39816), Statement of Objections of April 22, 2015.
[3] Polskie Górnictwo Naftowe i Gazownictwo S.A.
[4] System Gazociągów Tranzytowych EuRoPol Gaz S.A., a joint venture between PGNiG and Gazprom.
[5] The state compulsion exception excludes anticompetitive conduct from the scope of Articles 101 and 102 TFEU, when it is imposed by national legislation or by irresistible pressure exerted by national authorities, e.g., threat of state measures likely to cause great harm (see Polskie Górnictwo Naftowe i Gazownictwo S.A. v. Commission (Case T-399/19), EU:T:2022:44, paras. 54-55). This exception is applied restrictively and has been accepted only to a limited extent by EU courts. In particular, it will not be accepted when national law merely encourages or makes it easier for undertakings to engage in autonomous anticompetitive conduct (see Deutsche Telekom AG (Case C-280/08 P), EU:C:2010:603, paras. 80-82).
[6] Polish Gas Prices (Case COMP/AT.40497), Commission decision of April 17, 2019.
[7] Upstream gas supplies in Central and Eastern Europe (Case COMP/AT.39816), Commission decision of May 24, 2018. This decision was confirmed by the General Court in Polskie Górnictwo Naftowe i Gazownictwo S.A. v. Commission (Case T-616/18), EU:T:2022:43.
[8] According to Article 7(1) of Regulation No. 773/2004 relating to the conduct of proceedings by the Commission pursuant to Articles 101 and 102 of the TFEU, OJ 2004 L 123/18, the Commission shall inform the complainant of its reasons and set a time-limit within which the complainant may make its views known. Pursuant to Article 8(1), the complainant may request access to documents on which the Commission bases its provisional assessment.
[9] The Intention Letter referenced the intergovernmental Poland-Russia agreement governing the management of the Yamal pipeline, implying that Gazprom’s conduct might not have necessarily been attributable to the company.
[10] See, e.g., Commission v. ICap (Case C-39/18 P), EU:C:2019:584; CCPL and Others v. Commission (Case T-522/15), EU:T:2019:500; Printeos v. Commission (Case T-95/15), EU:T:2016:722; and GEA Group v. Commission (Case T-189/10), EU:T:2015:504.