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Denmark unveils new offset policy

The flag of Denmark. (Getty Images)

The flag of Denmark. (Getty Images)

The Danish government has updated its offset policy to address concerns that it imposed an unjustified requirement on foreign suppliers of defence equipment and services.

Under the new policy, which is a set of guidelines for administering industrial co-operation, Denmark may require foreign suppliers to collaborate with Danish companies only to protect the country's “essential” national security interests. The European Commission (EC) had alleged that the old policy allowed Denmark to mandate offsets for too many projects.

The new policy takes effect on 9 September, according to the Danish Business Authority (DBA). Existing contracts remain governed by the old policy, which was published in 2014.

“Under the new administrative guidelines, industrial co-operation remains a central tool for maintaining and developing strategical competences in the Danish defence industry to ensure the protection of Denmark's essential security interests,” the DBA says.

The EC opened infringement procedures against Denmark in January 2018, alleging the old policy violated procurement rules designed to promote cross-border competition. The DBA said that the EC decided to close the case in July 2021 in response to the new policy.

The DBA said that Denmark's “overarching process” for offsets will not change. The Danish Defence Acquisition and Logistics Organisation (DALO) will plan defence acquisitions, and the DBA and the Danish Ministry of Defence (MoD) will assess whether offsets should be required. Foreign suppliers that are expected to provide offsets will enter into an Industrial Co-operation Contract (ICC) with the DBA.

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