OGZPY PJSC Gazprom (PK)

BRUSSELS—Russia's PAO Gazprom and the European Union's competition watchdog said Wednesday they are close to settling a longstanding antitrust case against the state-controlled energy company.

If successful, a settlement would conclude one of the EU's most politically sensitive competition cases that has been complicated by the growing tensions between Moscow and Brussels over the conflict in Ukraine and Russia's bombing campaign in Syria.

"We are now putting the final touch to our commitment proposal. It will be sent to the European Commission shortly," Alexander Medvedev, Gazprom's deputy chairman, said following a meeting with the EU's competition commissioner, Margrethe Vestager. A person familiar with the negotiations said that nailing down the outstanding details for a preliminary settlement agreement might still take "a couple of weeks."

Ms. Vestager said that she and Mr. Medvedev had discussed concrete steps through which Gazprom could address the EU's concerns, such as allowing customers to resell gas to other countries and putting prices in Central and Eastern European gas markets in line with those charged elsewhere.

"It is now for Gazprom to formally submit commitments that meet the commission's objectives," Ms. Vestager said, adding that the talks might still fail.

If the commission finds Gazprom guilty of breaking the EU's competition rules it could impose fines of up to 10% of the company's annual revenue.

The commission started investigating Gazprom's business practices in 2011 amid suspicions that the company was abusing its dominant position in several countries that were almost entirely dependent on Russian gas. The two sides came close to settling the case in 2014, but talks were abandoned following Russia's invasion of the Ukrainian peninsula of Crimea and its backing for separatists in Ukraine's east.

In spring 2015, Ms. Vestager formally charged Gazprom, alleging the company breached antitrust rules in eight countries where it is the dominant gas supplier—Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

Gazprom, which has rejected the commission's charges, has insisted that the EU's antitrust rules don't apply to it as a state-controlled company.

The commission said restrictive terms in Gazprom contracts forced territorial constraints on customers, for instance by prohibiting them from re-exporting gas to another country, and that its practice of tying gas prices to the price of oil had led to unfair charges in several markets.

It also said that Gazprom had tied the conditions under which it sold gas to certain countries to their support for infrastructure projects, such as pipelines.

Once the commission and Gazprom have agreed on a preliminary settlement, the terms would be sent out for feedback from competitors as well as the countries at the center of the case.

"The commission would of course carefully analyse all feedback received," Ms. Vestager said. If Gazprom's commitments were found to be sufficient, they would become legally binding for the company.

Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com

(END) Dow Jones Newswires

October 26, 2016 13:55 ET (17:55 GMT)

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