Activation of the supply-crisis state
1. A supply crisis shall be considered to occur where:
(a)
there are serious disruptions or an imminent risk of such disruptions in the provision of crisis-relevant products; and
(b)
such serious disruptions or the imminent risk thereof are resulting or are likely to result in the adoption of divergent national measures related to crisis-relevant products which are not defence products, leading to a severe negative impact on the proper functioning of the internal market, in particular obstacles to cross-border trade in such crisis-relevant products, and on the functioning of the Union’s defence supply chains.
2. Where, pursuant to Article 59, the Commission or the Board becomes aware of a risk of serious disruption in the supply of crisis-relevant products or has concrete and reliable information on any other relevant risk factor or event materially affecting the supply of such products, the Commission, after consulting the Board, shall assess whether the conditions set out in paragraph 1 of this Article are met. That assessment shall take into account the potential impact and consequences of the supply-crisis state on the supply chains of the crisis-relevant products concerned within the Union, the results of stress tests conducted pursuant to Article 58, and assessments performed in other relevant Union crisis management frameworks. Where that assessment provides concrete and reliable evidence, the Commission may, after consulting the Board, propose to the Council to activate the supply-crisis state. Where it proposes to the Council to activate the supply crisis-state, the Commission shall inform the Parliament thereof.
3. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may activate the supply-crisis state. The duration of the supply-crisis state shall be specified in the implementing act and initially shall not exceed 12 months. That implementing act shall also specify which of the measures set out in Articles 62 and 63 are activated. In addition, the implementing act may identify for which crisis-relevant products which are not defence products those measures are activated.
4. The Council, acting by qualified majority, may amend the proposal referred to in paragraph 3.
5. The Commission shall report on a regular basis and at least every three months to the Council and to the European Parliament on the state of the supply crisis.
6. Before the expiry of the duration of the supply-crisis state, the Commission, taking into consideration the recommendation of the Board, shall assess whether it is justified to prolong it. Where such assessment provides concrete and reliable evidence that the conditions for the activation of the supply-crisis state are still met, the Commission may, after consulting the Board, propose to the Council to prolong the supply-crisis state.
7. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may prolong the supply-crisis state. The duration of the prolongation shall be limited to a maximum of 12 months and specified in the implementing act.
8. During the supply-crisis state, the Commission shall, after consulting the Board, assess the appropriateness of an early termination of the supply-crisis state. If the assessment so indicates, the Commission may propose to the Council to terminate the supply-crisis state.
9. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may terminate the supply-crisis state before the expiry date specified in the implementing act referred to in paragraph 3 or 7.
10. During the supply-crisis state, the Commission shall, upon request from a Member State or on its own initiative, convene extraordinary meetings of the Board where necessary. In line with Article 76(10), the Board shall invite, where relevant, high-level industrial representatives to meet in special configuration in order to discuss issues related to crisis-relevant products. Member States shall work closely with the Commission within the Board in order to ensure the coordination of any Union and national measures taken with regard to the supply chains of the concerned crisis-relevant products which are not defence products.
11. Upon expiry of the period for which the supply-crisis state is activated or prolonged, or upon its early termination, the measures taken in accordance with Articles 62 and 63 shall immediately cease to apply. Implementing acts that have been adopted in accordance with Article 63(7) and (9) shall nevertheless continue to apply until the priority-rated requests or priority-rated orders concerned have been completed.
12. The Commission and Member States shall update the mapping and the monitoring of the Union’s defence supply chains pursuant to Articles 56 and 57, taking into account the experience from the supply crisis, no later than six months after the expiry or early termination of the supply-crisis state.
Supply-crisis toolbox
1. Where the supply-crisis state is activated pursuant to Article 60 and where necessary in order to address the supply crisis in the Union, the Commission may take the measures provided for in Articles 62 and 63, as specified in the implementing act adopted by the Council in accordance with Article 60(3).
2. The Commission shall, after consulting the Board, restrict the application of the measures referred to in paragraph 1 to the crisis-relevant products which are not defence products that are subject to serious disruption or at imminent risk of such disruptions on account of the supply crisis. The application of the measures referred to in paragraph 1 shall be proportionate and restricted to what is necessary for addressing serious disruptions or mitigating an imminent risk of such disruptions affecting the supply chains of the crisis-relevant products concerned in the Union and shall be in the best interest of the Union. The application of those measures shall avoid placing a disproportionate administrative burden, in particular on SMEs.
3. Where the supply-crisis state is activated pursuant to Article 60 and where appropriate in order to address the supply crisis in the Union, the Board shall assess and advise on appropriate and effective measures.
4. The Commission shall regularly inform the European Parliament and the Council of any measures taken in accordance with paragraph 1 and explain the reasons for its action.
5. The Commission shall, taking into consideration the recommendation of the Board, issue guidance on the implementation and the use of the measures provided for in Articles 62 and 63.
Information requests
1. Where the Council activates the measure under this Article in accordance with Article 60(3), the Commission may, where the available information is not sufficient, request an economic operator contributing to the production of crisis-relevant products which are not defence products, with the prior agreement of the Member State on whose territory the production site of that economic operator is located, to provide information to that Member State within a set time limit about its production capabilities, production capacities and current primary disruptions. The Member State concerned shall make the requested information available to the Commission. The requested information shall be limited to what is necessary to assess the nature of the supply crisis or to identify and assess potential mitigation measures.
2. Before launching a request for information pursuant to paragraph 1, and with the prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located, the Commission may carry out a voluntary consultation of a representative number of relevant economic operators with a view to identifying the appropriate and proportionate content of such a request. The Commission shall prepare the request for information in cooperation with the Board.
3. The Commission shall without undue delay forward a copy of the request for information to the national competent authority of the Member State on the territory of which the production site of the economic operator concerned is located.
4. The request for information shall:
(a)
state its legal basis;
(b)
be limited to the minimum necessary and be proportionate in terms of the granularity and volume of the data requested and of the frequency of access to the data requested;
(c)
have regard for the legitimate interests of the economic operator and to the cost and effort required to make the data available;
(d)
include the contact information of the national competent authorities of the Member State on the territory of which the production site of the economic operator concerned is located to which the reply is to be sent;
(e)
and set out the time limit within which the information is to be provided to the Member State concerned; and
(f)
state the penalties provided for in Article 72.
5. Where the Member State concerned agrees to the launch of a request for information pursuant to paragraph 1, it may decide to address that request, as prepared by the Commission pursuant to paragraphs 2 and 4, directly to the economic operator concerned.
6. Each economic operator concerned, or a person duly authorised to represent that economic operator, shall supply the information requested on an individual basis to the Member State concerned.
7. The Member State concerned shall ensure that the requested information is made available without undue delay to the Commission.
8. If an economic operator established in the Union is subject to a request for information from a third country, related to its activities for the supply of crisis-relevant products which are not defence products, it shall inform the Member State on the territory of which its production site is located, in a timely manner. That Member State shall, in turn, inform the Commission, in such a manner as to enable the Member State concerned and the Commission to request similar information from the economic operator. The Commission shall inform the Board of the existence of such a request from a third country.
9. If an economic operator supplies incorrect, incomplete or misleading information in response to a request made pursuant to this Article, or does not supply the information within the prescribed time limit, it shall be subject to fines set in accordance with Article 72, except where the economic operator has sufficient reasons for not supplying the requested information or not supplying it within the prescribed time limit, in particular where the processing of the information request by an economic operator has the potential to significantly disrupt its operations, where the information is classified and marked as for national use only or where the disclosure of that information could significantly harm the economic operator’s business activity.
10. The Commission and the Member State concerned shall use secure means to launch the request for information and to handle any information acquired in accordance with Article 80.
11. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (a), TFEU.
Prioritisation of products which are not defence products
1. Where the Council activates the measure under this Article in accordance with Article 60(3), a Member State which faces severe difficulties either in the placing of an order or in the execution of a contract related to the supply of crisis-relevant products may submit a request to the Commission to request an economic operator to accept, or to prioritise, a certain order of crisis-relevant products which are not defence products.
2. Upon a request as referred to in paragraph 1, the Commission may, where the production or supply of crisis-relevant products which are not defence products cannot be achieved by any other measures provided for in this Chapter, address a request to the economic operator concerned after:
(a)
consulting, and receiving prior agreement, of the Member State on the territory of which the production site of the economic operator concerned is located; and
(b)
consulting the Member State on the territory of which the executive management structure of the economic operator concerned is located.
3. The request referred to in paragraph 2 shall include information about the legal basis for the request, specify the products, their specifications and quantities, specify the schedule and time-limit for performing and completing the order, and state the reasons justifying the use of the priority-rated request.
4. The Commission shall demonstrate that the choice of the recipients and beneficiaries of the request referred to in paragraph 2 is non-discriminatory and complies with Union competition rules.
5. The Commission shall base the request referred to in paragraph 2 on objective, factual, measurable and substantiated data, showing that such prioritisation is indispensable in order to ensure the proper functioning of the internal market, and having regard to the legitimate interests of the economic operator concerned and to the cost and effort required for any change in the production sequence of the supply chain.
6. The economic operator concerned shall reply to the Commission within five working days upon receipt of the request referred to in paragraph 2 and state whether it accepts or refuses the request. Where the urgency of the situation so requires, the Commission may, based on a justification of such urgency, request the economic operator to reply within a shorter deadline.
7. Where the economic operator to which the request referred to in paragraph 2 is addressed has expressly accepted that request, the Commission, by means of an implementing act, shall adopt a priority-rated request setting out:
(a)
the legal basis of the priority-rated request to be complied with by the economic operator;
(b)
the list of crisis-relevant products subject to the priority-rated request, their specifications, price and the quantities in which they are to be supplied;
(c)
the time limits within which the priority-rated request is to be completed;
(d)
the beneficiaries of the priority-rated request;
(e)
the waiver of contractual liability under the conditions laid down in paragraph 12 of this Article; and
(f)
the penalties provided for in Article 72 for non-compliance with the obligations stemming from that implementing act.
8. Where the economic operator declines the request referred to in paragraph 2, it shall provide the Commission with a detailed justification for that refusal.
9. Having due regard to the justifications provided by the economic operator under paragraph 8 of this Article, and after consulting and receiving prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of the economic operator is located, the Commission, by means of an implementing act, may adopt a priority-rated order imposing on the economic operator concerned an obligation to perform that order. The Commission shall state the reasons why, in line with the proportionality principle and the fundamental rights of the economic operator under the Charter of Fundamental Rights of the European Union and in light of the circumstances described in paragraph 1, it was necessary for it to adopt that implementing act. Any such implementing act shall provide the information referred to in paragraph 7.
10. The Commission shall not issue the priority-rated order in any of the following cases:
(a)
the economic operator is unable to perform the priority-rated order on account of insufficient production capability or production capacity, or on technical grounds, even under preferential treatment of the order; or
(b)
performance of the order would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity.
11. Priority-rated requests referred to in paragraph 7 and priority-rated orders referred to in paragraph 9 shall:
(a)
be placed at a fair and reasonable price, adequately taking into account the economic operator’s opportunity costs when fulfilling the priority-rated request or the priority-rated order as compared to existing contractual obligations;
(b)
take precedence over any performance obligation under private or public law related to the crisis-relevant products subject to the priority-rated request or to the priority-rated order, with the exception of obligations directly related to orders with a military purpose.
12. Economic operators subject to a priority-rated request pursuant to paragraph 7 or to a priority-rated order pursuant to paragraph 9 shall not be liable for any breach of contractual obligation that is governed by the law of a Member State, provided that:
(a)
the breach of contractual obligation is necessary for compliance with the required prioritisation;
(b)
the implementing act referred to in paragraph 7 or 9 has been complied with; and
(c)
where applicable, the acceptance of the priority-rated request did not have the sole purpose of unduly avoiding a prior contractual obligation.
13. Any conflict between a priority-rated request or a priority-rated order and a measure under any other prioritisation mechanism of the Union shall be discussed within the Board and resolved by the Commission, based on the weighing of the public interest.
14. The economic operator subject to a priority-rated request pursuant to paragraph 7 or to a priority-rated order pursuant to paragraph 9 may request the Commission to modify the implementing act referred to in paragraph 7 or 9 where it considers it to be duly justified based on one of the following grounds:
(a)
the economic operator is unable to perform the priority-rated request or the priority-rated order on account of insufficient production capability or production capacity, even under preferential treatment of the request or order;
(b)
completion of the request or the order would place an unreasonable economic burden on, and entail particular hardship for, the economic operator.
15. The economic operator shall provide all relevant and substantiated information to allow the Commission to assess the merits of the request for modification referred to in paragraph 14.
16. Based on the examination of the reasons and evidence provided by the economic operator, the Commission may, after consulting the Member State on the territory of which the production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of that economic operator is located, amend its implementing act to release, partially or in totality, the economic operator concerned from its obligations under this Article.
17. Where an economic operator established in the Union is subject to a measure of a third country which entails a priority-rated order or a priority-rated request of a crisis-relevant product which is not a defence product, it shall notify the Commission thereof. The Commission shall then inform the Board of the existence of such measure.
18. Where an economic operator subject to a priority-rated request pursuant to paragraph 7 or a priority-rated order pursuant to paragraph 9 intentionally, or through gross negligence, does not comply with that request or order, it shall be subject to fines set in accordance with Article 72, except where:
(a)
the economic operator is unable to perform the priority-rated request or the priority-rated order on account of insufficient production capability or production capacity, or on technical grounds; or
(b)
performance or completion of the order would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity.
19. The Commission shall adopt an implementing act laying down the practical and operational arrangements for the functioning of priority-rated requests and priority-rated orders, including a methodology for the determination of the price of crisis-relevant products subject to priority-rated orders.
20. The implementing acts referred to in this Article shall be adopted in accordance with the examination procedure referred to in Article 77(4).
21. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (b), TFEU.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
