OREANDA-NEWS. The European Commission today sent a statement of objections to Russia's state-controlled Gazprom over alleged abuse of dominant market position in central and eastern European gas markets.

EU competition commissioner Margrethe Vestager's preliminary view is that Gazprom is hindering competition in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

Gazprom is breaking EU anti-monopoly rules by pursuing a strategy of partitioning central and eastern European markets, she said.

The commission specifically alleges that Gazprom may be using its dominant market position in Bulgaria and Poland to force wholesalers to make "unrelated" commitments concerning gas transport infrastructure.

The commission also alleges that Gazprom's territorial restrictions in supply agreements with wholesalers and some industrial customers may result in higher gas prices and allow Gazprom to pursue an unfair pricing policy in five countries — Bulgaria, Estonia, Latvia, Lithuania and Poland.

Prices charged to wholesalers there are "significantly higher" compared with Gazprom's costs or benchmark prices.

"We'd like to focus where we have the strongest case. That does not mean that you don't see an effect on the Hungarian market," Vestager said.

Vestager added that she has no wish to politicise the case.

She declined to "speculate" on possible remedies such as freeing pipeline capacity, revoking problematic clauses or just delivering the gas to the EU border. Gazprom has first to respond to the commission's preliminary view of what is a "very dominant" position, she said.

The commission started formal proceedings in August 2012 and has looked at alleged anti-competitive practices in contracts between Gazprom and gas buyers in central and eastern Europe. The investigation has centred on resale prohibitions, destination clauses and the company's insistence on oil-indexed prices in its long-term contracts.

Vestager emphasised that the charges should not be interpreted as a ruling against justifiable price differences. "We do not want to decide on prices. We do not want to pick the winners."

"It is not oil indexation in itself but the way of applying it in concrete contracts where we have an issue. It contributes to the fact that prices are so much higher that you can say they are unfair."

Vestager added that if no solution is found then EU fines can reach a maximum of 10pc of the concerned company's global turnover.

Gazprom has 12 weeks to reply to the commission's statement of objections. The company may also request an oral hearing to present its arguments.

There is no deadline for the commission to complete its investigation.