Brussels gives broad powers to compel companies to create and terminate supply contracts to boost supply chains in times of crisis, such as the coronavirus pandemic.
According to the Financial Times, the bill would give the European Commission significant discretion to declare a state of emergency, and would lead to a series of interventions aimed at preventing product shortages in vital sectors.
Companies are unhappy after hearing about the plan to protect the single market from supply shocks.
“We would be very concerned if this proposal were adopted in such an intrusive manner,” said Martinos Parisas, director of internal market at BusinessEurope, which represents employers in the bloc.
“Member states can force contract law to be void, or compel companies to disclose commercially sensitive information and share product inventory, or order their production in any type of crisis decided by the Commission,” Barisas said.
Companies are more interested in the "priority orders" system, under which Brussels can dictate which companies make them and who they sell to, breaking contracts with customers.
Borisos said the two companies agreed on a proposed mechanism to avoid a recurrence of disruptions during the coronavirus outbreak when some member states closed borders and restricted exports. But he said companies believe the current plan is too intrusive and should give companies more flexibility.
There is local opposition to the plan by single market commissioner Thierry Breton, which could change.
An EU official said: “The tool should have focused in scope to eliminate the risks of fragmentation of the single market in the event of a large-scale crisis. It has now become an octopus of the planned economy, imagining that it can expand its tentacles through global supply chains and control them.”
The final version of the proposals will be approved by EU commissioners on September 13, with Commissioner Ursula von der Leyen speaking the following day as the nation-state's centerpiece.
According to this concept, a committee that consults with member states will claim "responsibility" if it discovers that a crisis may be imminent. This will allow interested companies to request information about supply chains and customers. It could require governments to create strategic stocks. In some cases, these measures can be made mandatory by means of fines.
The second phase, which requires the approval of member states, will give the authority the authority to manage market activity and purchase goods directly, again with unspecified fines for non-compliance.
During the pandemic, the European Union passed legislation allowing it to ban the export of vaccines in response to the United States blocking the bloc's supply of vaccines. Governments have also asked companies to shift production to counter masks, gowns and ventilators amid global shortages.
EU officials say there are similar problems with fertilizers today. High gas prices cut production by 70% across the block and raised prices for farmers. One said, "In recent years, we have had shortages of masks, ventilators, vaccines, pills, and fertilizers. Instead of improvising solutions, we need to be better prepared. To anticipate and respond to the next crisis."
The official noted that several countries have introduced procedures for strategic reserves and priority orders, including the US Defense Production Act.
"We were inspired by a lot of Americans," the official said. “We don't include products because we don't know what the next crisis will be. But it is of course not yoghurt. It should be essential to the economic and social functioning of the internal market.