Linking Arms on European Security: Lowering the Regulatory Bar for Defence Investment, Joint Ventures and Consolidation?

In this piece, authors William Leslie, Christoph Barth, Natura Gracia & Gerwin van Gerven (Linklaters) discuss Europe’s intensified focus on defence funding and the regulatory changes needed to ensure those resources translate into effective investment. With NATO’s 5% target, Germany’s budget increase, and the EU’s SAFE scheme, the Defence Readiness Omnibus package seeks to implement the EU Commission’s Defence-Readiness 2030 goals. It proposes legislative and non-legislative measures to streamline investment and development, clarify funding conditions, and reduce bureaucratic friction, particularly by recognizing the unique legal status of the defence sector under Article 346 TFEU.

The authors highlight the Package’s stance on competition law, noting that it encourages a more nuanced view of defence industry mergers, with the Commission indicating it will weigh the sector’s strategic importance alongside competition concerns. While not a radical overhaul of merger control, this signals a potential shift in how defence-related consolidation is evaluated—suggesting broader benefits such as enhanced security and EU strategic independence may, in some cases, justify concentration. This could open the door to building European “champions” in defence, reducing reliance on non-EU suppliers.

The Package goes on to emphasize a willingness by the Commission to offer guidance on antitrust matters beyond merger control—such as joint procurement, R&D, and scaling production—while still enforcing existing competition laws. Though defence sector cooperation will be reviewed with greater flexibility, companies must not assume immunity from antitrust rules. The 2023 fines in the military hand grenades cartel case are a reminder that violations will still be penalized…

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