With the “Zeitenwende” in security policy and a significant increase in defense spending, calls for industrial policy measures to strengthen the domestic arms industry are growing louder. However, little attention is being paid to the role of competition policy. This article first reconstructs the specific characteristics of arms markets and empirically examines the intensity of competition at the national and European levels. Against this backdrop, we discuss the tension between industrial and competition policy from a regulatory perspective. As a result, we argue that industrial policy interventions should be strictly designed in line with competition rules and that the strengthening of defense capabilities should be organized primarily through pro-competitive measures, in particular joint European procurement, open tendering procedures, and the removal of market access barriers.