National security and EU merger control: the role of articles 346 TFEU and 21(4) EUMR in EU defence concentrations

The rapidly deteriorating global security environment has pushed EU institutions and Member States to call for further consolidation of the European defence industrial base, with the European Commission taking a proactive stance in promoting a stronger, more integrated, and competitive defence sector to enhance interoperability and reduce market fragmentation. This strategic shift is likely to result a growing number of defence-related concentrations within the internal market. This may in turn lead Member States to increasingly resort to Article 346 TFEU and Article 21(4) of the EU Merger Regulation, which allow national governments, on the one hand, to withhold sensitive information and to exclude certain defence-related transactions from EU merger control where essential security interests are at stake, and on the other, to adopt additional national measures to EU level concentrations to protect legitimate interests, such as public security. This article aims at investigating the legal framework surrounding these derogations in the context of defence-related concentrations, considering both their scope and interpretation under the relevant case law, as well as their interaction with national FDI regimes. On this basis, it then evaluates whether increased reliance on these mechanisms may challenge the uniform application of the EU Merger Regulation and create tensions between EU-level and national objectives in defence policy.