EU Commission seeks emergency powers on supply crisis with threats of fines

By Foo Yun Chee and Miranda Murray

BRUSSELS/BERLIN (Reuters) -The European Commission is seeking emergency powers to force companies to make key products and stockpile goods in a crisis or else face fines, according to an EU document seen by Reuters on Friday.

The proposed Single Market Emergency Instrument, set to be presented on Sept. 13, comes in response to supply bottlenecks caused by the COVID-19 pandemic and Russia's invasion of Ukraine. Russia calls its actions in Ukraine "a special military operation."

It also aims to deter foreign countries with similar powers from taking such action without first informing the 27-country bloc.

The move is contested by some EU countries worried about a power grab by the EU executive, while critics say it smacks of China-style state capitalism.

The Commission will need to thrash out details with EU countries and EU lawmakers before the proposal can become law in a process that will take months.

If passed, the Commission may ask EU states to reorganise supply chains and increase supplies of crisis-relevant goods as quickly as possible, the document said.

These could include expanding or repurposing existing production capacities or setting up new ones, as well as placing crisis-relevant goods on the market, it said.

Companies may also have to prioritise the production of certain critical goods.

Businesses that provide incorrect or misleading information can face fines up to 300,000 euros ($300,540) while those that fail to comply with an order to prioritise key products could be hit with daily periodic penalty payments of 1.5% of the average daily turnover.

A Commission official said the commission does not comment on leaked documents.

Consultancy Eurointelligence warned the proposal "is strategic autonomy of the illiberal Chinese variety".

Frankfurter Allgemeine Zeitung (FAZ) newspaper earlier reported on the proposal.

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(Writing by Miranda Murray; Additional reporting by Foo Yun Chee in Brussels; Editing by Philippa Fletcher and Josie Kao)