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GAS Nord Stream 2 11 May, 2018 10:00 am   
Editorial staff

UOKiK: The proceedings may at least delay Nord Stream 2 (INTERVIEW)

The Office of Competition and Consumer Protection (UOKiK) initiated proceedings against Gazprom and five international entities responsible for financing the Nord Stream 2 gas pipeline. In an interview with BiznesAlert.pl, the vice-president of the Office, Michał Holeksa, explained the reasons why UOKiK decided to take legal action. In his opinion, the intent of the office is not just to impose penalties and block the project, but to ensure compliance with the law.

BiznesAlert.pl: Why did UOKiK decide to initiate proceedings regarding the financing of the Nord Stream 2 gas pipeline?

Michał Holeksa:All entrepreneurs should take into account the fact that antimonopoly regulations should be obeyed both in Poland and in the entire European Union. According to the proceedings, in this case, the entrepreneurs try to get around these rules in pursuit of their goal. Although in August 2016, the participants of the Nord Stream 2 project received a clear signal from UOKiK that the special purpose vehicle financing the project can not be created. The consortium members withdrew the application and then by circumventing our regulations undertook to finance this investment.

Yes, but Gazprom is currently the sole shareholder of Nord Stream 2 AG.

Yes. However, all participants of the project agreed to take part in its financing and signed appropriate agreements in this matter. This is a deliberate action to circumvent the Polish law on competition and consumer protection.

Should the European Commission take the floor on this matter?

The proceedings are conducted under the jurisdiction of the Polish antimonopoly authority. We informed the European Commission about the actions taken.

What is the next procedure?

We are waiting for replies from all parties, for which they have 21 days. After reading them, it is possible that we will have additional questions and further explanations will be needed. Then, after analyzing the material, the Office will be able to issue a decision. There are several possibilities, one of them is a decision obliging companies to withdraw from financing this investment. Another possibility is the order to restore the state from before making the concentration and the penalty for breaking the law.

What can be expected and if it will potentially affect the Nord Stream 2 itself, or Gazprom and their partners in the implementation of this project?

Our analysis shows that punishment can apply to all partners of this project. The amount of the financial penalty may be up to 10 percent of the annual turnover of these companies. The base year is the year preceding the penalty. If we assume that it would be imposed this year, it will apply to the turnover for 2017.

Do the parties to the proceedings have the opportunity to appeal against a potential solution in this case?

After the decision, companies have the right to appeal to the Court of Competition and Consumer Protection.

Can the proceedings therefore block the construction of Nord Stream 2?

It seems so. The proceedings may affect the blocking of the project or its delay. Our intention is not just to block Nord Stream 2, but to force companies to comply with antitrust law.

Considering that directly Nord Stream 2 does not apply to Poland, if in the course of antitrust proceedings UOKiK shows violations of the provisions, can it order the retention of financing and whether such a decision would be binding?

In fact, the pipeline will not run through Poland and no Polish enterprises are involved in its construction. As we pointed out in the reservations, the construction of this pipeline will lead to a significant restriction of competition on the broadly understood gas market in Poland. As I said earlier, the decision to order the suspension of project financing may also be taken.

Interview conducted by Piotr Stępiński