EU Competition Commissioner Margrethe Vestager today formally charged Gazprom, one of Russia’s largest companies and a dominant supplier to much of central and eastern Europe, with breaking EU antitrust rules.

The accusation is that Gazprom used its market power to bully and overcharge European governments and companies — specifically preventing the free flow of gas across EU states and extracting commitments in return for gas to keep control of pipelines.

“The Commission’s preliminary view is that Gazprom is breaking EU antitrust rules by pursuing an overall strategy to partition Central and Eastern European gas markets, for example by reducing its customers’ ability to resell the gas cross-border,” said a commission statement.

The Commission said it felt that Gazprom was hindering gas supply markets in eight central European member states, implementing “an overall abusive strategy.” The Commission also accused Gazprom of overcharging customers in five EU states, as well as leveraging its dominant market position by making supplies to Poland and Bulgaria conditional on unrelated pipeline projects.

“I am concerned that Gazprom is breaking EU antitrust rules by abusing its dominant position on EU gas markets,” said Vestager.

Gazprom denied it had done anything wrong, saying in a statement that it “considers the objections put forward by the European Commission to be unfounded.”

The potential penalty is as much as 10 percent of Gazprom’s annual revenues, running into billions of euros, although a maximum fine is unlikely.

The probe was launched in 2011. The parties had explored the possibility of settling the case but the talks broke down. Vestager has insisted that the investigation is not politically motivated, but the charges are likely to sour already tense relations between Russia and the EU.

In a sign of what those complications will look like, Gazprom noted in its statement that it was a Russian, not an EU company  and that it is empowered by the laws of the Russian Federation with special socially-significant functions and has the status of a strategic government-controlled business entity.”

Gazprom has 12 weeks to respond to the charges.

The Russian firm supplies about a third of Europe’s gas, but close to 100 percent of gas to some central European countries.