Alerts 9 May, 2018 11:46 am   
Editorial staff

UOKiK can stop the financing of Nord Stream 2

The Office of Competition and Consumer Protection has initiated proceedings against Gazprom and five international entities responsible for financing the Nord Stream 2 gas pipeline.

UOKiK suspects that the parties to the transaction, despite the withdrawal of the notification of concentration, jointly implement the project, financing the Nord Stream 2.

This is a precedent procedure conducted by the President of the Polish Office of Competition and Consumer Protection – Marek Niechciał.

The case concerning the construction of the Nord Stream 2 gas pipeline was analyzed by UOKiK in August 2016. At that time, the President of UOKiK decided that the planned concentration between Gazprom and five international companies could lead to restriction of competition.

The joint venture was to design, finance, construct and operate Nord Stream 2 gas pipeline that was to run from the Russian Baltic Sea coast to the point of departure near Greifswald in Germany. At the time, in the opinion of UOKiK, Gazprom had a dominant position in gas supplies to Poland, and the transaction could lead to further strengthening of the company’s negotiating power towards recipients in our country. The participants of the consortium withdrew the notification, which in practice meant a ban on the merger.

In April 2017, UOKiK re-examined the case and initiated the preliminary proceedings. According to media coverage the would-be joint venture participants signed a contract for financing the construction of the gas pipeline, despite the objection of UOKiK,

– Two years ago, the company that was supposed to construct the Nord Stream 2 gas pipeline was not cleared for this transaction by UOKiK. Unfortunately, as the preliminary proceedings proved, the entities decided to finance this project despite UOKIK’s objection. This may constitute a violation of anti-monopoly law and that is why we put the allegations to Gazprom and five other entities – Marek Niechciał, the President of UOKiK explains.

The precedent anti-monopoly proceedings was initiated by UOKiK a few days ago. The President of UOKiK has charged six companies which are suspected of finalizing the transaction despite UOKIK’s objection. These are entrepreneurs belonging to international groups: Gazprom from the Russian Federation, Engie from Switzerland, as well as four from the Netherlands: Uniper OMV, Shell and Wintershall.

In the opinion of the Authority, the activities of the would-be consortium members could be an obvious attempt to circumvent the lack of consent to establish a company financing the construction of the gas pipeline. . In fact, the purpose of both activities was the same. Both the creation of a joint venture and the conclusion of subsequent agreements were mainly aimed at financing the construction of Nord Stream 2.

The President of the Office may impose upon an undertaking a maximum fine of 10% of the turnover generated in the financial year preceding the year in which the fine is imposed if the undertaking performed a concentration without obtaining consent from the President of the Office. In addition, where the concentration has already been implemented and restoration of competition in the market is otherwise impossible, the President of the Office may order in particular: disposal of the entirety or a portion of the undertaking’s assets; disposal of stocks or shares ensuring control over the undertaking or dissolution of the company over which the undertakings have joint control.