National security considerations in competition enforcement

1. National security and implications for competition enforcement

1.1 The evolving scope of national security and long-term objectives

National security has long been central to public policy, rooted in the raison d’être of sovereign states and their core protective function (Krause and Williams, 2018[1]; Hobbes, 1651[2]). While the concept varies across jurisdictions, it has traditionally been associated with the protection of citizens, territorial integrity and essential strategic interests from serious threats (Wu, 2025[3]). This core conception emphasises sovereignty, defence capabilities and the capacity to safeguard fundamental interests against external aggression or destabilisation.

National security concepts have evolved alongside changes in the international system. Greater global economic integration, digitalisation and technological interdependence create and reshape vulnerabilities. Whereas earlier approaches focussed primarily on military threats, policy discourse now recognises that interdependence and global supply chains can create new forms of strategic exposure (Wu, 2025[3]). These risks arise not only from direct threats such as conflict, but also from structural vulnerabilities, including dependencies in critical sectors, cyber exposure and erosion of domestic capabilities, all of which can undermine long-term strategic resilience (Martyniszyn, 2025[4]).

Economic security has gained prominence within this evolving framework. It refers to a nation’s ability to sustain economic stability and growth by strengthening resilience to shocks, including safeguarding key assets, maintaining critical infrastructure and ensuring access to essential resources such as energy, food, critical raw materials and advanced technologies. It may also extend to maintaining viable strategic industries and supply chains, maintaining trade and investment flows, and managing cyber risks. Economic security is closely related to broader national security considerations and is increasingly addressed through interconnected policy frameworks (OECD, 2025[5]; Ciuriak and Goff, 2021[6]).

Recent events have brought concerns related to economic resilience, competitiveness and strategic autonomy to the forefront of policy debate. Disruptions to global supply chains during the COVID-19 pandemic exposed vulnerabilities in access to pharmaceuticals, medical equipment and other essential goods. Volatility in energy and agricultural markets following Russia’s war of aggression against Ukraine further underscored these vulnerabilities. Similar disruptions affecting critical minerals, semiconductors and other key inputs have highlighted how such dependencies affect economic performance, essential services and industrial capacity (OECD, 2025[7]).

Against this backdrop, policy discourse in a number of jurisdictions links national security with long-term economic competitiveness (OECD, 2025[5]). Competitiveness in strategically significant sectors is increasingly treated as both an economic objective and a component of national security. Longer-term structural transitions, including digitalisation and advances in AI and advanced manufacturing, have reinforced the strategic importance of these sectors. Policy discussions emphasise control over critical technologies, the preservation of domestic research and development (R&D) capabilities and sustained technological leadership as elements of national security (OECD, 2025[5]). Policies aimed at maintaining domestic production capacity, securing access to critical inputs and strengthening innovation may therefore serve both economic and national security goals. In this context, digital sovereignty and resilience refer to the capacity to absorb shocks, adapt and maintain essential functions over time.

These dynamics are reflected in concrete policy initiatives across jurisdictions, particularly in relation to AI and enabling technologies (see Box 1).

Box 1. AI, competitiveness and national security policy frameworks

AI has emerged as a central axis of the relationship between competitiveness and national security. As a general-purpose technology with applications across defence, intelligence, industrial production and digital infrastructure, AI is widely understood as a potential source of long-term strategic advantage. Policy frameworks across jurisdictions increasingly frame leadership in AI not only as an economic objective, but as a core component of national security.

This shift is often articulated in terms of technological leadership. In the United States (US), policy initiatives explicitly link AI development to strategic positioning, including efforts to expand domestic computing capacity, secure access to advanced chips and align export controls with national security objectives. These measures are frequently framed in terms of “winning the AI race”.

In the European Union (EU), similar dynamics are expressed through the lens of competitiveness, resilience and strategic autonomy. The Draghi Report situates Europe’s economic challenges within a context of geopolitical instability and technological transformation, noting that the spread of AI creates a “window” to restore innovation, productivity and manufacturing capacity. It operationalises this shift through a dedicated focus on increasing security and reducing dependencies, identifying external reliance in areas such as energy, critical raw materials and key technologies as structural risks. In this framing, competitiveness, technological leadership and security are treated as mutually reinforcing objectives.

Other jurisdictions have adopted related approaches. Policy frameworks in Japan and the People's Republic of China (hereafter ‘China’), among others, emphasise technological capability, supply chain resilience and domestic innovation capacity as central to economic security and long-term strategic positioning, including in AI and advanced computing.

Across these approaches, national security is increasingly understood to depend not only on protection from external threats but also on the capacity to develop, control and deploy critical technologies. This includes securing access to enabling inputs, sustaining innovation ecosystems and maintaining resilience in the face of technological and geopolitical uncertainty. As a result, competitiveness and technological leadership are no longer treated as adjacent economic goals, but as integral components of contemporary national security policy.

Note: AI systems depend on a broader technological ecosystem, including high-performance computing, data infrastructure and advanced semiconductors. Semiconductor policies, such as the US CHIPS and Science Act and the European Chips Act, illustrate how control over these enabling inputs is increasingly linked to both economic and national security objectives.

Source: White House (2025[8]), Winning the Race: America’s AI Action Plan, https://www.whitehouse.gov/wp-content/uploads/2025/07/Americas-AI-Action-Plan.pdf; Draghi, M (2024[9]), The future of European competitiveness,https://commission.europa.eu/topics/competitiveness/draghi-report_en; EC (2025[10]), The AI Continent Action Plan, https://digital-strategy.ec.europa.eu/en/library/ai-continent-action-plan; Japan Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry (2024[11]), Outline of Semiconductor Revitalization Strategy in Japan, https://www.meti.go.jp/english/policy/0704_001.pdf; Ma, T; Wang, T; Zhang, J (2026[12]), China’s Semiconductor Industry Strategy, https://link.springer.com/book/10.1007/978-981-95-3332-9.

This expanded framing reflects a broader shift in which economic resilience and technological capability are treated as core components of national security. While jurisdictions continue to diverge in how they define national security and its boundaries, the overall direction of change is clear: national security is increasingly central to economic policymaking. This shift defines the context for understanding its growing interaction with competition enforcement across a widening set of sectors (Martyniszyn, 2025[4]).

1.2 Competition and national security: Complementarities and tensions

The relationship between competition and national security can be understood along two dimensions: complementarities, where competitive markets support prosperous and secure economies, and tensions, where security objectives may require difficult trade-offs and may justify departures from competition in some cases.

Competitive markets can support national security by enhancing resilience and adaptability in the face of shocks. By sustaining supply diversity, competition enables firms to adjust production and sourcing in response to shocks (Coscelli and Thomson, 2024[13]; OECD, 2025[5]; 2025[7]). Conversely, weaker competitive pressure may lead to more brittle outcomes, with fewer alternative capabilities and reduced capacity to respond to disruption.

In addition, competition contributes to national security by fostering innovation, productivity and dynamic efficiency. While the relationship between competition and innovation is complex, evidence suggests that preserving rivalry is, on balance, more conducive to sustained technological progress than insulating firms from competitive pressure (OECD, 2023[14]; Griffith and Van Reenen, 2021[15]). More broadly, competition improves resource allocation, strengthening the economic base that supports investment and long-term performance in strategic sectors (OECD, 2014[16]).

Competitive conditions influence not only the pace of innovation but also its diffusion across firms and sectors. Technology adoption often follows an S-shaped curve, with slow initial uptake, rapid acceleration as technologies scale, and a plateau as markets mature. Competition is particularly important during the acceleration phase, where diffusion determines whether new technologies become widely adopted or remain confined to early adopters. In the absence of sufficient rivalry, incumbents may delay transitions toward more efficient technologies to preserve existing business models, increasing the risk of a “low-technology trap” (Cœuré, 2026[17]). Historical experience illustrates this risk, including in cases such as IBM and AT&T, where innovations emerged only once competitive constraints were restored (FTC, 2024[18]).

Notwithstanding these complementarities, important tensions arise where national security objectives require trade-offs between competition, resilience and control over strategic capabilities. These tensions reflect both conflicts between policy objectives and the use of different institutional mechanisms, including regulation, procurement and state ownership. Competition and state intervention are distinct instruments that may operate in parallel and address different constraints. Recent work has examined how industrial policy can support these objectives while preserving competition, highlighting the broader policy toolkit available to governments (OECD, 2024[19]). Accordingly, the interaction between competition and national security is best understood as a question of institutional design rather than a binary choice.

In strategically significant sectors, policymakers may prioritise scale, co-ordination and long-term investment to ensure reliability and strategic capability, particularly where coordination failures or resilience risks are present. In contexts characterised by high fixed costs, long development cycles or significant uncertainty, larger firms or more concentrated market structures may be better positioned to mobilise resources, absorb risk and sustain investment (OECD, 2025[5]). Governments may pursue these objectives through procurement, industrial policy or state ownership, particularly where competitive dynamics alone may not deliver sufficient continuity of supply, or where strategic capabilities must be developed or retained domestically.

State-owned enterprises (SOEs) and procurement frameworks are established instruments for operationalising such objectives. Across jurisdictions, they are used to pursue public policy goals, including safeguarding national security, ensuring the availability of essential goods and services, supporting strategic sectors, and addressing market failures. Country practices illustrate how these rationales translate into institutional arrangements. For example, state ownership in energy and defence sectors in countries such as France and Finland reflects the objective of maintaining control over strategic infrastructure and capabilities. In other cases, such as Mexico’s national oil company, ownership is linked to ensuring continuity and security of supply. By contrast, in Korea, state ownership has been used to support competitiveness and industrial upgrading in technology sectors (OECD, Forthcoming[20]). In this sense, public ownership and directed market structures can facilitate coordination, risk-sharing and long-term investment, particularly where private incentives are insufficient or where policy objectives extend beyond efficiency to include security or sovereignty.

However, these approaches involve trade-offs. Scale and concentration are not equivalent, and scale can often be achieved without reducing rivalry.1 Where consolidation reduces competition, it may weaken incentives to innovate, limit alternative technological pathways and reinforce incumbent advantages. Evidence indicates that weakening rivalry often undermines, rather than strengthens, innovation outcomes (Aghion et al., 2018[21]). In addition, investment constraints may arise at different stages of the firm lifecycle, suggesting that, in some contexts, addressing financing constraints or enabling co-operation may be more effective than reducing rivalry (CMA, 2025[22]). The central policy question is therefore how to preserve the benefits of both scale and competition over time, in light of sector-specific conditions and policy objectives.

These trade-offs are most visible in debates around “national champion” strategies. Such approaches are often justified on the basis that concentration of resources supports technological leadership, strategic autonomy and geopolitical leverage (Baer, 2025[23]; Zhang, 2024[24]). These arguments are closely linked to national security considerations, including maintenance or development of critical capabilities and supply chain resilience, particularly where governments seek to ensure that key technologies or industrial capacities are developed and retained domestically.2

This reflects a difference in policy perspective rather than a direct contradiction. Competition policy focusses on market performance and dynamic efficiency, while national security policy emphasises control, resilience and the location of strategic capabilities. As a result, competition alone does not determine which firms or jurisdictions capture strategic advantages. At the same time, preferential treatment or reduced rivalry may weaken incentives to innovate and reduce efficiency, potentially undermining long-term competitiveness, including in sectors critical to national security (OECD, 2009[25]).

A related issue arises under the principle of competitive neutrality. Governments may assign public policy objectives to firms, particularly SOEs, including ensuring resilient service provision or safeguarding critical infrastructure. Such mandates may justify deviations from strict neutrality where they are clearly defined, transparent and proportionate (OECD, Forthcoming[20]). However, such interventions may influence resource allocation and market outcomes, with implications for efficiency, innovation and resilience. The challenge is to ensure that these interventions remain targeted, periodically reviewed, and do not distort competition beyond what is necessary, particularly where such distortions may have lasting effects on market structure or dynamic competitive processes (OECD, 2024[26]).

A further dimension concerns asymmetric global competition. Domestic firms may face competitors benefiting from state support or more permissive regulatory environments (OECD, 2024[27]). Addressing such asymmetries requires distinguishing between addressing external distortions and weakening competition. Policy responses targeting the source of distortions, such as international co-operation or targeted instruments, may be more effective than relaxing domestic competition rules (Cœuré, 2025[28]).3

The relationship between competition and national security does not reflect a simple trade-off. Different institutional arrangements, including competition, regulation, procurement and state ownership, can support security objectives under different conditions. In certain contexts, particularly where large-scale coordination or rapid capability development is required, state-directed approaches have contributed to significant technological advances, as illustrated historically in early space exploration programmes (NASA, 2020[29]). However, such models do not provide a general basis for sustained innovation or efficiency over time.

Effective policy requires calibrating these instruments to sector-specific conditions, ensuring that interventions addressing national security concerns do not undermine the competitive dynamics that support long-term innovation, resilience and capability. Across contexts, evidence suggests that sustained rivalry remains a central foundation for these outcomes, even where complementary tools are required to address specific market failures or security constraints.

1.3 How legal frameworks address national security in the context of competition enforcement

In a limited number of jurisdictions, national security considerations are addressed directly through legal mechanisms that allow for derogations from, or disapplication of, competition law. These mechanisms are distinct from broader public interest provisions and are specifically designed to protect such interests. As such, they provide a clear legal basis for national security to prevail over competition law in defined circumstances. This reflects the recognition that, in exceptional cases, competition objectives may be subordinated to core state interests (see Box 2).

Box 2. National security derogations and exemptions from competition law

European Union (EU). Article 346 of the Treaty on the Functioning of the European Union (TFEU) allows Member States to take measures necessary to protect essential security interests relating to the production or trade in arms, munitions and war material, including by disapplying EU competition rules. Article 346 TFEU is limited specifically to military purposes. In merger control, Article 21(4) of the EU Merger Regulation allows Member States to take measures to protect legitimate interests such as public security, even where a concentration falls within EU jurisdiction. The draft EU Merger Guidelines suggest that public security measures coordinated through EU-level merger or FDI review mechanisms may benefit from a presumption of compatibility with EU law.

India. Section 54 of the Competition Act 2002 allows the government to exempt enterprises or conduct from the application of the Act in the interests of national security or public interest. This power applies across competition enforcement.

Israel. Section 52 of the Economic Competition Law allows the Minister of the Economy to exempt restrictive arrangements (referring to mergers and conduct) from competition law where this is required for reasons of foreign policy or state security, subject to consultation requirements.

Source: EU (2004[30]), Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32004R0139; EU (2012[31]), Consolidated version of the Treaty on the Functioning of the European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12012E346; EC (2026[32]), Draft Communication from the Commission: Guidelines on the assessment of mergers under Council Regulation, https://competition-policy.ec.europa.eu/document/download/46dde10f-85c1-4590-a3f4 2b71f85685ef_en?filename=Merger%20Guidelines%20-%; Agrawal, A (2025[33]), Power to Exempt under Section 54 of Competition Act, 2002, https://lawbhoomi.com/power-to-exempt-under-Section-54-of-competition-act-2002/; Israel Government (2026[34]), Economic Competition Law, https://www.gov.il/BlobFolder/legalinfo/competitionlaw/en/englishsite_Economic%20Competition%20Law.pdf.

These mechanisms reflect the particular status of national security within the broader set of policy objectives that may intersect with competition law. Unlike other considerations, national security is closely linked to core state functions, including sovereignty, defence and the protection of essential capabilities (Wehrlé and Pohl, 2016[35]). It may rely on geopolitical assessments, intelligence inputs and strategic risk evaluation. For this reason, jurisdictions that provide for such derogations typically assign decision making responsibility to governments, reflecting the nature of the assessment and its institutional implications, including the need for political accountability in balancing security and economic objectives (OECD, 2016[36]; 2022[37]).

Evidence from jurisdictions with such mechanisms suggests they are invoked only rarely. The EU framework illustrates a narrowly defined approach. The scope of Article 346 TFEU is confined to defence-related activities and has been interpreted restrictively by the Court of Justice of the European Union (CJEU), subject to strict necessity and proportionality requirements (Cunha Rodrigues, 2024[38]). This limits its application, particularly in sectors characterised by dual-use technologies.4 As a result, the EU framework remains closely anchored to a defence-specific conception of national security, even as broader policy discussions increasingly extend to economic resilience, technological capabilities and strategic dependencies, creating a degree of tension between legal doctrine and evolving policy concerns (Scandola, 2025[39]).

By contrast, Israel illustrates a broader application of national security derogations in practice. In 2015, the government invoked Section 52 of the Economic Competition Law in relation to arrangements concerning offshore gas fields central to domestic energy supply, notwithstanding identified competition concerns. This remains the only known instance to date of its use. The Israeli Supreme Court upheld the use of the exemption, while emphasising that restrictions on competition must be balanced against state and security interests and justified by correspondingly weighty considerations. In this context, the Court accepted that ensuring the development and reliability of domestic energy supply constituted a significant security interest, notwithstanding the acknowledged harm to competition (Supreme Court of Israel, 2016[40]). The case reflects the broader expansion of national security considerations beyond traditional defence sectors.

These examples, drawn from a limited number of jurisdictions, suggest that while these exceptional legal frameworks differ significantly in scope, their use has to date remained cautious.5 The contrast between narrowly defined derogations (EU) and more flexible government-led exemption powers (Israel) illustrates how institutional design shapes both the availability and practical use of these powers. As national security considerations expand to encompass economic resilience, technological capabilities and supply chain dependencies, these differences may become more consequential in determining how frequently such mechanisms are invoked and under what conditions.

In contrast to such competition law derogations, the US provides statutory exemptions or immunities that permit limited co-ordination among market participants in defined national security contexts. Unlike derogations, which allow competition law to be set aside in specific cases, these mechanisms are established in legislation ex ante and typically include procedural safeguards, government oversight and periodic review. They can therefore be understood as a distinct category of legal mechanism at the intersection of competition law and national security (see Box 3).6

Box 3. Statutory exemptions and immunities for co-ordination in the public interest

United States. Antitrust law applies broadly, but Congress has enacted statutory exceptions to advance specific public interest objectives. In the national security context, the Defense Production Act (DPA) allows firms to enter into voluntary agreements to meet national defence requirements after a Presidential finding of conditions that pose a direct threat to the national defence or its preparedness programs. Firms who are participants in such voluntary agreements can benefit from a limited antitrust defence for actions taken in furtherance of the agreement. This limited antitrust defence applies only to conduct undertaken pursuant to an approved agreement, following review by the DOJ, in consultation with the FTC, and subject to oversight and reporting requirements. The limited antitrust defence covers both federal and state antitrust claims, whether brought by public enforcers or private parties, though not foreign antitrust law claims.

The National Cooperative Research and Production Act (NCRPA) provides limited antitrust protections for joint research and production ventures, reflecting a legislative judgment that certain forms of co-operation may promote innovation while maintaining safeguards against anticompetitive effects.

Source: US Congress (1950[41]), Defense Production Act, 50 U.S.C. §§ 4557, https://www.govinfo.gov/content/pkg/COMPS-8323/pdf/COMPS-8323.pdf; US Congress (1993[42]), National Cooperative Research and Production Act, 15 U.S.C. § 4305, https://www.law.cornell.edu/uscode/text/15/4305.

In the US, a concrete example is the Voluntary Intermodal Sealift Agreement (VISA), established under Section 708 of the Defence Production Act and most recently renewed through 2029. The agreement allows participating ocean carriers to co-ordinate the provision of sealift capacity and share operational information to support US military deployment requirements. While such coordination could ordinarily raise concerns under Section 1 of the Sherman Act, it benefits from conditional antitrust immunity when conducted pursuant to an approved voluntary agreement. Approval requires review by the DOJ, in consultation with the FTC, and is subject to oversight, transparency requirements and periodic renewal. In successive reviews, the authorities have concluded that any restriction of competition is limited in scope and justified by the need to ensure reliable access to commercial sealift capacity for national security purposes (Federal Register, 2024[43]).7

Beyond these national security-specific derogations, some jurisdictions provide broader mechanisms that allow governments to intervene in competition enforcement on public interest grounds. These frameworks typically arise in merger control and permit decision makers to take into account a wider set of policy considerations, which may include national security alongside other objectives such as financial stability, employment or environmental protection (OECD, 2016[36]). Unlike the mechanisms described above, they do not establish national security as a distinct legal basis for disapplying competition law but instead incorporate it within a broader set of public interest considerations (see Box 4).

Box 4. Public interest intervention mechanisms in merger control

Cyprus. The Minister of Energy, Commerce and Industry may “call in” a concentration by declaring it to be of major importance, in which case the merger control rules apply even if the usual jurisdictional thresholds are not met. The Minister may also declare a concentration to be of major public interest and refer it to the Council of Ministers, which may approve or reject the transaction notwithstanding the competition authority’s assessment. Public-interest grounds include effects on public security.

France. The Minister of the Economy may “call in” a merger case after the competition authority has issued its initial decision and issue a final decision based on broader public interest grounds. These include industrial development; the competitiveness of the undertakings concerned in international competition and employment considerations. This mechanism reallocates final decision making authority to the Minister.

Germany. The Federal Minister for Economic Affairs may grant ministerial authorisation for a merger that has been prohibited by the Bundeskartellamt if the restriction of competition is outweighed by advantages to the economy as a whole or justified by overriding public interests.

Spain. The Minister for Economic Affairs may refer a merger decision to the Council of Ministers for reasons of general interest when the competition authority has prohibited the merger or authorised it subject to commitments. The Council of Ministers may then confirm the competition authority’s decision or authorise the merger, with or without conditions, provided the decision is based on general-interest considerations other than the protection of competition. These may include defence and national security, public security or health, environmental protection, technological development, or the maintenance of sectoral regulatory objectives.

Source: Georgiades & Pelides (2025[44]), Law and Practice in Cyprus, https://practiceguides.chambers.com/practice-guides/comparison/935/16517/25912-25913-25914-25915-25916-25917-25918-25919-25920; French Commercial Code (2015[45]), Article L430-7-1, https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000031013097/; French Competition Authority (2026[46]), Call-in by the French Minister of the Economy, https://www.autoritedelaconcurrence.fr/en/merger-control; German Competition Act (2023[47]), Section 42 Ministerial Authorisation, https://www.gesetze-im-internet.de/englisch_gwb/englisch_gwb.html; GCR (2023[48]), National Authority for Markets and Competition (CNMC), https://globalcompetitionreview.com/insight/enforcer-hub/2023/organization-profile/spain-national-authority-markets-and-competition-cnmc.

Within these broader frameworks, national security is typically treated as one among several public interest considerations. However, both legal design and practice suggest that it may carry particular weight relative to other public interest objectives. In the United Kingdom (UK), for example, national security was the original, and for a period the sole, public interest ground for ministerial intervention under the Enterprise Act 2002. Although subsequent amendments expanded this list, national security has remained a central basis for intervention, reflecting its connection to core state functions and its capacity to justify departures from competition in exceptional circumstances (Kokkoris, 2021[49]).

These public interest mechanisms should be distinguished from national security screening regimes that operate under separate legal frameworks. In most OECD jurisdictions, national security concerns regarding foreign ownership or control of strategic assets are assessed through specialised mechanisms, such as foreign direct investment (FDI) screening regimes, rather than through competition law (OECD, 2022[37]). These frameworks operate independently, although they may run in parallel with merger control.

The UK provides a clear illustration of this distinction. While national security has historically served as a public interest ground for intervention under the Enterprise Act 2002, the National Security and Investment Act 2021 established a separate statutory regime for national security screening, administered by the Investment Security Unit, while the Competition and Markets Authority (CMA) continues to assess mergers under competition law (UK Cabinet Office, 2023[50]). Recent reforms in some jurisdictions further reinforce this separation. In Poland, responsibilities for national security review have been reassigned from the competition authority to government ministries (Braksator, Kolasinska and Sendrowicz, 2025[51]).

In a limited number of jurisdictions, public interest considerations are assessed directly by competition authorities as part of merger control. For example, in Kenya and South Africa, competition authorities are required to evaluate specified public interest factors alongside competition effects, including employment and the competitiveness of national industries (Eveleigh, 2024[52]; CompCom, 2018[53]). Such approaches remain relatively uncommon. In most jurisdictions, public interest and national security assessments are undertaken by governments rather than competition authorities (OECD, 2016[36]).

In sum, institutional frameworks differ not only in whether broader considerations may be taken into account, but also in when and by whom they are assessed. Some approaches seek to address trade-offs ex ante, by specifying how resilience, investment, innovation, scale or other considerations may be assessed within the competition analysis, where they can be translated into competition-relevant effects. The EC’s draft Merger Guidelines illustrate this approach (2026[32]). Other jurisdictions address such trade-offs ex post, by allowing governments to intervene, typically after the competition authority has completed its assessment. This distinction can affect institutional accountability and the role of competition authorities.

1.4 The role of competition authorities in an evolving national security context

1.4.1 The boundary of competition enforcement

As the scope of national security expands, national security concerns are increasingly likely to arise in competition cases. This trend is not without precedent. Similar debates have appeared during earlier periods of technological change or geopolitical transition (USDOJ, 2025[54]; OECD, 2024[27]). However, as the scope of national security expands across a wide range of sectors, it raises a central question for competition authorities: which national security concerns can be assessed within competition law and which fall outside its scope?

The central analytical test is whether the concern can be articulated as competition-relevant effects. Where national security arguments can be expressed in terms of market structure, firm behaviour or competitive dynamics, including reduced rivalry, barriers to entry or expansion, supply dependency or diminished innovation, they fall within the scope of competition law and can be assessed using established analytical frameworks for competitive effects (EC, 2025[55]; Coscelli and Thomson, 2024[13]).

This may arise, for example, where concerns about resilience or security of supply reflect increased concentration, reduced supplier diversity or reliance on a limited number of critical inputs. Similarly, claims that a merger is necessary to sustain industrial capacity or technological development may be advanced as efficiency arguments, subject to standard requirements such as verifiability, necessity and merger specificity (OECD, 2009[25]; FTC, 2024[18]). Thus, competition law already provides a framework for analysing a subset of concerns that are increasingly framed in security terms.

By contrast, some national security concerns cannot be meaningfully translated into competition-relevant effects. Where arguments rest on geopolitical assessments, intelligence inputs, preferences over domestic control, or distinctions between firms based on nationality, ownership or foreign influence, they fall outside the analytical reach of competition law.8 In these cases, the issue is not evidentiary but institutional: such assessments require political judgement and are more appropriately addressed by governments or specialised bodies (Wehrlé and Pohl, 2016[35]; Martyniszyn, 2025[4]).

This institutional distinction also reflects considerations of democratic legitimacy, accountability and institutional competence. Assessments involving trade-offs between national security, economic efficiency, geopolitical risk and broader societal objectives often entail inherently political judgements. Competition authorities, whose role is grounded in legally defined economic criteria, are not generally the bodies best placed to balance such considerations or to prioritise among competing national security objectives. Assigning these decisions to elected governments or designated authorities helps ensure that such trade-offs are made within the appropriate institutional framework, while also preserving the independence, analytical coherence and predictability of competition enforcement (Ezrachi, 2025[56]).

In practice, however, the boundary between competition-relevant effects and broader strategic considerations may be difficult to draw. Some objectives commonly framed as national security, such as resilience or innovation capacity, may often have an economic dimension and may be relevant to market functioning. Where national security claims are material to the factual context of a case, authorities may need structured input from defence, security, procurement, investment screening, sectoral regulators, or other government bodies. Such consultation should inform the factual assessment of constraints, feasibility and remedies, but should not transfer responsibility for geopolitical or intelligence-based balancing to the competition authority.

In addition, some legal frameworks expressly provide for public-interest considerations to ministers, government bodies, or competition authorities, while in other areas, governments may lack clearly actionable instruments. These gaps may create pressure on competition authorities to absorb concerns that sit at the edge of, or outside, competition analysis. The degree of this pressure may depend on the level of independence the authorities have, based on the relevant legal framework.

As discussed further in Section 2, in practice, these distinctions arise across different forms of competition enforcement. National security considerations may be reflected directly in the assessment of theories of harm and competitive effects, including in relation to market structure, resilience or innovation. They may also be advanced by parties as justifications for mergers and co-ordinated or unilateral conduct, thereby shaping both offensive and defensive arguments in competition proceedings.

The increasing prominence of national security in economic policy creates a risk that such considerations may be invoked opportunistically or strategically in competition enforcement. Firms subject to investigation may frame mergers or conduct in terms of security, resilience or strategic necessity, including where such claims cannot be substantiated within competition law frameworks or supported by verifiable evidence. Governments may also introduce national security considerations into competition enforcement. In some cases, national security concerns may overlap with, or obscure, other policy objectives, including preferences for domestic ownership, national champions or local consolidation. This does not make security concerns illegitimate, but it underscores the need to distinguish genuine competition-relevant effects from broader policy choices.

Beyond the statutory mechanisms discussed in Section 1.3, such considerations may arise through formal and informal channels. Government agencies may raise national security concerns through procedural avenues, including statements of interest, amicus curiae briefs or observations in judicial proceedings. They may also do so informally, including through policy engagement or public intervention. While such interventions do not alter the applicable legal standards under competition law, they may place pressure on competition authorities and courts to consider matters outside their analytical scope. Maintaining this distinction is essential to preserving the integrity and predictability of competition enforcement (OECD, 2016[36]; 2022[37]; Martyniszyn, 2025[4]; Ezrachi, 2025[56]).

1.4.2 Enforcement discretion, advocacy, guidance and institutional co-ordination

Even where national security considerations fall outside competition enforcement, competition authorities may still play an important role through enforcement discretion, advocacy, guidance and institutional co-ordination. National security concerns increasingly shape the policy environment in which they operate, particularly in sectors linked to resilience, critical inputs and technological capabilities. Although such considerations do not alter legal standards, they may affect prioritisation decisions and how authorities engage with governments and firms (Martyniszyn, 2025[4]; Ezrachi, 2025[56]).

A first role arises in the exercise of enforcement discretion. While legal standards remain unchanged, competition authorities typically retain discretion in how they prioritise cases, allocate resources and sequence enforcement activities (OECD, 2026[57]). In an evolving national security context, this may involve giving greater attention to sectors or conduct considered strategically significant. Such discretion does not relax competition rules but affects how and where they are applied. That said, the exercise of discretion must remain grounded in transparent and objective criteria to avoid undermining legal certainty, equal treatment and the credibility of competition enforcement.9

A second role is advocacy toward governments and policymakers. Competition authorities can contribute economic and legal expertise to broader policy debates by explaining how competitive market structures support resilience, innovation and long-term performance, and by identifying policy options that achieve security objectives with the least distortion to competition (Coscelli and Thomson, 2024[13]). This function is particularly important where governments consider measures in strategically significant sectors. In such contexts, advocacy can help ensure that competition considerations are incorporated into policy design early and that security measures do not unnecessarily entrench concentration, dependency or barriers to entry or expansion (OECD, 2019[58]).10 This type of advocacy can help governments design measures that pursue national security objectives while limiting unnecessary restrictions on competition (see Box 5).

Box 5. Competition advocacy and national security: exclusive rights in defence-related services

The French competition authority examined a draft decree granting exclusive and special rights to operators supporting the Ministry of Armed Forces in international military co-operation activities. It noted the public-interest rationale of the project, while identifying competition risks relating to the scope and duration of exclusive rights, operator selection and remuneration, subcontracting arrangements, and the possible leveraging of exclusive rights into competitive markets.

Source: French Competition Authority (2025[59]), Avis 25-A-07 du 14 mai 2025, https://www.autoritedelaconcurrence.fr/fr/avis/portant-sur-un-projet-de-decret-relatif-lattribution-de-droits-exclusifs-et-speciaux-des-0.

This role may also involve formal and informal institutional co-ordination with other public bodies, particularly in sectors such as defence, energy and advanced technologies, where competition issues intersect with procurement, industrial policy, trade and national security. Through such co-ordination, competition authorities can contribute expertise on market structure and competitive effects and help identify solutions that preserve competition as far as possible (Martyniszyn, 2025[4]). While engaging in these processes, it remains important to preserve clear institutional boundaries. Competition authorities should not assume responsibility for geopolitical or intelligence-based assessments, and such trade-offs should remain the responsibility of governments or other designated bodies. Maintaining this distinction supports analytical clarity, institutional independence and legal predictability.11

A third role is guidance to businesses and other stakeholders. As security and resilience concerns become more prominent, firms may seek to adapt their conduct through mergers, co-operation, information exchange, supply arrangements or other conduct considered necessary to address strategic risks. Competition authorities can reduce legal uncertainty by clarifying how existing competition rules apply in such settings and by distinguishing conduct that may be compatible with competition law from conduct that remains prohibited. This can help avoid both unlawful overreach and unnecessary chilling effects on legitimate business responses. Recent guidance issued by the Japan Fair Trade Commission (JFTC) on the relationship between economic security initiatives and competition law demonstrates this approach (Government of Japan, 2025[60]).12

Notes

← 1.  This trade-off may be easier to manage in larger or more integrated markets, where firms can achieve scale through access to a broader customer base rather than through consolidation among close competitors. This is consistent with the Draghi Report’s emphasis on completing the EU Single Market: deeper market integration can support scale while preserving rivalry (Draghi, 2024[9]).

← 2.  The European context is distinctive because the geographic scope of commerce and national security is not fully congruent. Unlike sovereign jurisdictions, the EU combines an integrated market and EU-level competition enforcement with national responsibility for many security, defence and strategic-control decisions. This makes national champion arguments more complex: consolidation may be justified by reference to European scale, while the relevant security interests may remain national.

← 3.  Historical experience across jurisdictions suggests that strong domestic rivalry can underpin international competitiveness. For example, competition among multiple pharmaceutical firms in Switzerland has been associated with sustained innovation and global competitiveness in life sciences, while intense domestic rivalry in the United States software and computing industries has coincided with rapid technological advancement and market leadership (Porter, 1990[126]).

← 4.  Dual-use goods and services exhibit a porous boundary between defence, national security and ordinary commercial markets. Technologies such as GPS, networking technologies, semiconductors, satellites, drones, advanced computing, cybersecurity tools and AI systems may originate in, be funded by, or be accelerated through defence or security-related programmes, and later become central to civilian and commercial markets. Contemporary security concerns are therefore more likely to arise in relation to dual-use goods and services. However, their dual-use character should not by itself displace competition law or justify treating national security as a free-standing objective within competition analysis. Competition authorities should instead ask whether security-related legal, regulatory or policy conditions affect competition-relevant facts, such as procurement eligibility, export-control restrictions, security clearances, customer acceptance, credible entry, substitutability, access to critical inputs or remedy feasibility. Broader concerns relating to strategic control, intelligence risk, foreign influence or geopolitical dependency remain for governments or specialised bodies.

← 5.  India provides a further point of comparison. Although the legal framework allows broad exemptions, like in Israel, available evidence suggests that practice has favoured targeted and case-specific responses, namely limited to crisis situations such as access to essential supplies during COVID-19, rather than formal disapplication of competition law (Agrawal, 2025[33]). This practice during COVID-19 was broadly aligned with approaches in other jurisdictions, including the EU, Japan and the US, which issued guidance indicating that exceptional circumstances would be taken into account in competition enforcement (JFTC, 2020[138]; ECN, 2020[139]; FTC and DOJ, 2020[140]).

← 6.  This differs from general competition law provisions allowing exemptions based on efficiency considerations, such as Article 101(3) TFEU, which permits restrictive agreements where they generate sufficient consumer benefits. Such provisions operate within competition law and are not designed to address national security objectives as such.

← 7.  Co-operation frameworks in other jurisdictions are limited and rarely framed explicitly in national security terms. While some jurisdictions provide mechanisms to exempt or authorise co-ordination among competitors, these are typically grounded in broader public-interest or sectoral policy objectives. For example, in Australia, the competition authority may grant authorisation for conduct that would otherwise breach competition law where it delivers a net public benefit, thereby conferring immunity from legal action (ACCC, 2026[103]). In Japan, the Antimonopoly Act allows certain forms of coordination to be exempt where authorised under other legislation for specific policy objectives, including sectoral arrangements (JFTC, 2026[147]). However, unlike the US framework under the DPA, these systems are generally sector-specific and do not constitute horizontal, national security-driven regimes providing ex ante antitrust immunity.

← 8.  National security assessments may require distinctions between firms based on nationality, place of incorporation, ownership, control, foreign influence or links to particular states. Competition authorities do not ordinarily discriminate between firms on this basis; their analysis generally focusses on market behaviour, competitive constraints, and effects. Such nationality or control-based distinctions may be relevant to competition analysis only where they affect competition-relevant facts, such as whether a firm can bid, supply, expand, obtain security clearances, access critical inputs, or be treated by customers as a credible alternative.

← 9.  Recent policy developments in some jurisdictions, including the UK, illustrate how broader strategic priorities may shape the environment in which competition authorities operate, while leaving their legal enforcement framework unchanged (CMA, 2026[133]; UK Government, 2025[137]).

← 10.  Even where security objectives are prioritised, competition impact assessments remain relevant to assess proportionality and identify less distortive means of achieving policy goals. OECD work on pro-competitive industrial policy highlights that strategic interventions can be designed to preserve rivalry rather than entrench dominance (OECD, 2024[19]). Consistent with the OECD Competitive Neutrality framework, such measures should be transparent, proportionate, subject to periodic review and, where appropriate, time-bound, so that security-justified interventions do not entrench distortions or weaken competitive dynamics beyond what is necessary (OECD, 2020[151]).

← 11.  Illustrative cases reflect this institutional boundary. In Chile, the competition authority cleared the acquisition of CGE by State Grid after assessing competitive effects, while emphasising that national security concerns articulated by the government regarding foreign ownership fell outside the scope of merger control (FNE, 2021[128]; Irarrázabal, 2022[129]). In the US, the FTC closed its investigation into GenCorp’s acquisition of Pratt & Whitney Rocketdyne despite identifying competition concerns, following support from the Department of Defence based on national security considerations (FTC, 2013[127]). Subsequent statements by US agencies, however, have reaffirmed that preserving competition in defence markets is itself a national security objective (USDOJ and FTC, 2016[153]; US DoD, 2022[80]).

← 12.  For example, in 2026, the US FTC and DOJ launched a public consultation on updated guidance for business collaborations, aiming to clarify how antitrust rules apply to co-operation in response to evolving technologies and market conditions while maintaining clear boundaries against anticompetitive conduct (USDOJ and FTC, 2026[152]).