Delivering more competition to the EU defence markets? Examining the defence procurement directive, Directive 2009/81/EC

In this paper, we examine the defence procurement directive, Directive 2009/81/EC, which targeted ensuring that defence markets operate under EU rules based on competition, transparency and equal treatment. We divide EU Member States into two groups based on national defence industry size and analyse national defence industrial strategies and intra-EU market competition from 2005 to 2020. First, we ask how Member States position the directive in their defence industrial strategies. We find that Members States with large defence industries seek to protect national interests, while Member States with small defence industries additionally seek new market opportunities. In addition, Member States use defence-materiel strategies as justification documents used to exempt themselves from the directive. We then ask whether the directive is associated with an increase in intra-EU market competition and estimate the intra-EU market competition with the outcome variables of domestic and non-EU procurement, intra-EU imports, intra-EU licences and global licences. We find that small differences found in the levels of the outcome variables were not permanent.