Brussels said President Andrzej Duda's unexpected vetoing of two controversial reforms, including one targeting the supreme court, had not ended the risk to the independence of Polish judges.
European Commission Vice President Frans Timmermans said the Polish crisis posed a threat to democratic standards not just in that country but across the 28-nation bloc.
"In this past week some things have changed in Poland -- and some things have not," Timmermans told a news conference in Brussels after a fresh high-level meeting on the crisis.
With Poland's ruling Law and Justice (PiS) party vowing to push ahead with the reforms, Timmermans warned in particular against the mass sacking of supreme court judges.
"If such a measure is taken the commission is ready to immediately trigger the Article 7 procedure," Timmermans said.
Article 7 is a never-before-used EU process designed to uphold the rule of law, a so-called "nuclear option" that can freeze a country's right to vote in meetings of EU ministers.
Brussels and Warsaw have been at loggerheads over the legal changes ever since the PiS took power in 2015 and announced reforms to Poland's constitutional court.
The latest threats infuriated Warsaw.
"We won't accept blackmail on the part of EU officials, especially blackmail that is not based on facts. All the laws prepared by the Polish parliament are in compliance with the constitution and democratic rules," Polish government spokesman Rafal Bochenek told the PAP news agency.
This month the Polish government pushed through a bill that would have reinforced political control over the Supreme Court and another allowing parliament to choose members of a body designed to protect the independence of the courts.
Duda vetoed those two while signing into law another measure that allows the justice minister to unilaterally replace the chief justices of the common courts.
Prime Minister Beata Szydlo has insisted that PiS will press ahead with the others.
The European Commission said it will launch separate legal action against Poland over the reform targeting the common courts. That could lead to Poland being hauled before the bloc's highest court and eventually given a fine.
The Poland crisis threatens to deepen an east-west split in the EU, with fears that authoritarian governments in eastern states are undermining the 28-nation bloc's fundamental democratic principles.
While the EU's announcement today marks a further raising of the stakes in its confrontation with Poland, the chances are slim that its voting rights could actually be suspended.
Populist Hungarian Prime Minister Viktor Orban has vowed he would instantly veto any such move by the EU.
The EU brought in Article 7 in response to fears about the rule of law in the wave of eastern states like Poland joining after 2004, although it was mainly intended as a backstop or threat that had little chance of being used.
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