Economy

Poland brings legal action over Nord Stream 2, threatens partners with fine

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

It said the precedent procedure was initiated several days ago, but the announcement was made on May 9.

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.

"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," UOKiK said in the statement posted on its website.

In 2016, Polish officials analyzed the decision of the six companies to establish a company for building the Nord Stream 2 pipeline and decided that the planned concentration between Gazprom and five international companies could lead to restriction of competition, the office said.

UOKiK concluded that Gazprom already 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 the country. "The participants of the consortium withdrew the notification, which in practice meant a ban on the merger," the office said.

UOKiK President Marek Niechciał discovered that the partners had started funding the project. "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," Niechciał said.

In the opinion of the office, the activities of Gazprom and its partners - Engie, Uniper OMV, Shell, and Wintershall - "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 office said.

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