European Commission guarding the competitiveness

| Foreign Markets |

We have recently wrote about the entry of Russia into the WTO and how the native industry including Pulawy Company was preparing for this movement. Another important issue worth discussing is the European Commission monitoring the markets for natural gas prices and possible breaches of competition law by Russia.

DUAL-PRICING STRATEGY

Specifically it is about the “dual-pricing” – selling the same or identical product at different prices in different. In this case, it comes to gas prices. Today, the production of fertilizers in Russia is cheaper only because of this mechanism.

The Commission is now working on a list of problematic topics. The basic principle in this case is the international trade law relating to the WTO. On 7 September, in a speech on EU trade relations with Russia, Karel De Gucht, commissioner for trade, issued several questions to Russia concerning Russia’s compliance with WTO rules.

EUROPEAN COMMISSION VS. RUSSIA

It is because of dual pricing, the European Commission has also launched a formal antitrust investigation against Gazprom. Brussels checks whether the Russian gas company is not limiting competition in the Central and Eastern Europe markets in this way.

“Such behavior (…) can be an obstacle to competition and lead to high prices and the deterioration of supply security. As a result, it may harm consumers in the EU” – justified the Commission. The Commission indicated that by abusing of its dominant position, Gazprom could lead to trade disturbances between EU countries, and would be inconsistent with Article 102 of the EU Treaty.

Acting in the aim of Brussels fertilizers’ organization called Fertilizers Europe we have been monitoring the work, participating and representing our business to some extent. Russia’s entry to WTOPis a great achievement and a great chance to regulate trade relations. What is important, is pricing gas in the internal market by the so-called WTO’s minimum, that is cost plus profit plus investment, so that the gas export does not subsidize of local sales.