Companies that refuse to comply with these rules face fines of up to 200,000 euros

Under the new legal instrument published on 19 September, the European Commission will be able to intervene in markets and, in emergency situations, require European companies to prioritise specific orders over others.

The so-called Single Market Emergency Instrument (SMEI) aims to prevent the shortages, supply chain disruptions and stockpiling seen during the C19 pandemic, when various EU member states introduced unilateral measures to secure masks, gloves or testing materials.

“The C19 crisis showed that our single market is not perfect. It is strong, but not unbreakable,” said EU Competition Commissioner Margrethe Vestager. According to her, the unilateral measures introduced by some member states caused supply shortages elsewhere when they were needed most. “Instead of relying on ad hoc (‘for this purpose’) improvised measures, the single market emergency instrument will provide a structural solution to maintain the free movement of goods, people and services in adverse times,” said EU Internal Market Commissioner Thierry Breton, speaking alongside Margrethe Vestager.

The SMEI instrument introduces a phased approach that would grant the Commission emergency powers to monitor and prevent any potential threats that could lead to disruptions or shortages of key products in the EU. In normal circumstances, the EU executive and member states will exchange information, conduct training and simulations to prepare for possible crises, and issue early warning signals when potential threats or incidents are identified.

If a crisis is detected, EU countries will be invited to voluntarily share information on the supply chain of specific strategic goods or services.

This so-called “vigilance mode” will also allow the Commission to call on countries to build strategic reserves to prevent shortages. In “emergency mode”, when a crisis or threat negatively affects the availability or free movement of goods, the Commission may request information from European companies and ask them to prioritise orders for specific goods needed during the crisis.

Companies that refuse to comply with Brussels' requests will be allowed to justify their position, but may be fined up to 200,000 euros.

The emergency mode will also prohibit member states from restricting the export of critically important goods or the movement of essential workers. EU countries will also be required to notify the Commission and justify any unilateral measures they might introduce, such as border closures.

The emergency mode, which requires the approval of a majority of EU countries to be activated, would also allow the Commission to purchase highly important goods on behalf of EU member states – similar to the joint procurement scheme for C19 vaccines in 2020 and 2021.