COMMISSION STAFF WORKING PAPER Security Industrial Policy Accompanying the document Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee Security Industrial Policy Action Plan for an innovative and competitive Security Industry
Date: 2012-07-26
Institutions: European Commission
Subjects: EU market, air safety, competitiveness, innovation, maritime safety, protective equipment, research and development, security services, social impact, terrorism

EUROPEAN COMMISSION 

Brussels, 26.7.2012  
SWD(2012) 233 final 

COMMISSION STAFF WORKING PAPER 

Security Industrial Policy 

Accompanying the document 

Communication from the Commission to the European Parliament, the Council and the 
European Economic and Social Committee 

Security Industrial Policy 

Action Plan for an innovative and competitive Security Industry 

{COM(2012) 417 final} 

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1.1. 

1.2. 

2. 

3. 

INTRODUCTION ....................................................................................................... 4 

CONSULTATION AND EXPERTISE ....................................................................... 5 

CONTEXT ................................................................................................................... 7 

PROBLEM DEFINITION ........................................................................................... 8 

3.1. 

MARKET OVERVIEW .............................................................................................. 8 

3.1.1.  OVERVIEW ON THE SCOPE OF THE ANALYSIS................................................ 8 

3.1.2.  RELATIVE MARKET SIZE AND EMPLOYMENT FIGURES............................... 9 

3.1.3.  DISTINCTIVE FEATURES OF THE SECURITY MARKET ................................ 10 

3.1.4.  COMPETITIVENESS OF THE EU SECURITY INDUSTRY ................................ 12 

3.2. 

THE MAIN PROBLEMS OF THE SECURITY SECTOR IN THE EU AND 
THEIR DRIVERS...................................................................................................... 18 

3.2.1.  THE FRAGMENTATION OF THE EU SECURITY MARKETS........................... 18 

3.2.2.  THE GAP BETWEEN RESEARCH AND MARKET ............................................. 24 

3.2.3.  THE UNCERTAINTY OF SOCIETAL ACCEPTANCE FOR SECURITY 

TECHNOLOGIES ..................................................................................................... 27 

4. 

4.1. 

4.2. 

4.3. 

5. 

6. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

8. 

8.1. 

8.2. 

8.3. 

THE CURRENT SITUATION .................................................................................. 31 

MARKET FRAGMENTATION ............................................................................... 31 

GAP BETWEEN RESEARCH AND MARKET ...................................................... 32 

INTEGRATION OF THE SOCIETAL DIMENSION INTO INDUSTRIAL 
POLICY ..................................................................................................................... 33 

EU RIGHT TO ACT.................................................................................................. 33 

OBJECTIVES ............................................................................................................ 35 

ENVISAGED POLICY INITIATIVES..................................................................... 36 

MARKET FRAGMENTATION ............................................................................... 36 

THE GAP BETWEEN RESEARCH AND MARKET ............................................. 40 

THE INTEGRATION OF THE SOCIETAL DIMENSION ..................................... 40 

OVERVIEW OF THE ENVISAGED POLICY INITIATIVES................................ 41 

THE EXPECTED BENEFITS OF THE ENVISAGED POLICY INITIATIVES .... 42 

MARKET FRAGMENTATION ............................................................................... 42 

GAP FROM RESEARCH TO MARKET ................................................................. 44 

SOCIETAL ASPECTS .............................................................................................. 46 

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LIST OF ACRONYMS............................................................................................................ 47 

ANNEXES ............................................................................................................................... 49 

ANNEX 1: SUMMARIES OF THE WORKSHOPS .............................................................. 49 

ANNEX 2: RESULTS OF THE PUBLIC CONSULTATION ON AN INDUSTRIAL 

POLICY FOR THE SECURITY INDUSTRY .......................................................... 52 

ANNEX 3: SECTORS OF THE SECURITY INDUSTRY..................................................... 73 

ANNEX 4: STRUCTURE OF THE PROBLEM DEFINITION ............................................. 75 

ANNEX 5: OVERVIEW OF THE MOST IMPORTANT CHALLENGES TO THE 

INTERNAL SECURITY OF CITIZENS AMONG THE EU 27. ............................. 76 

ANNEX 6: DEFINITION OF PRE-COMMERCIAL PROCUREMENT .............................. 77 

ANNEX 7: COMPETITIVENESS PROOFING – TWO ILLUSTRATIVE CASES ............. 79 

ANNEX 8: BACKGROUND TO QUANTITATIVE ANALYSIS OF CERTIFICATION ... 98 

ANNEX 9: BACKGROUND TO QUANTITATIVE ANALYSIS OF PCP ........................ 103 

ANNEX 10: BACKGROUND TO QUANTITATIVE ANALYSIS OF CIV-MIL 

SYNERGIES............................................................................................................ 106 

ANNEX 11: INITIAL LIST OF EU WIDE STANDARDS FOR SECURITY .................... 109 

GENERAL ANNEXES: ........................................................................................................ 115 

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1.1. 

Introduction 

Security  is  unmistakably  one  of  the  central  concerns  of  any  society.  A  safe  and  secure 
environment is the very basis on which any stable society is founded upon. Citizens need to 
be free of security related preoccupations if they want to live their lives freely and contribute 
to the well being of our society.  

Our societies become ever more dependent on technologies, foreign supplies of energy and 
raw materials. The constant technological evolution of our society had countless benefits for 
our daily lives, but the growing performances of our energy, transport and communication 
networks has also led to an ever increasing technological dependency1. 

A  vivid  example  of  the  consequences  of  a  terrorist  attack  were  of  course  the  losses  in  the 
aftermath of the 9/11 attacks, which did not only lead to the death of over 3000 people but 
also had a dramatic effect on the worldwide economy. It is estimated that 9/11 caused losses 
in  US  productivity  amounting  to  US$  35  billion,  47  billion  in  total  output  and  a  rise  in 
unemployment by almost 1% in the following quarter.2 

Open data puts the direct cost of crime, terrorism, illegal activities, violence and disasters in 
Europe at EUR 650 billion / year (excluding bribery, corruption and money laundering) or 
about 5% of the EU 27 GDP (~billion 12.000 EUR in 2010).3 At the same time we see an 
increase of natural disasters requiring crisis management technologies.4 

The  threats  to  which  our  society  is  confronted  are  permanently  evolving,  terrorist  and 
criminals will always look for loopholes in our technologies and try to bypass our security 
systems.  We  need  to  be  aware  of  the  fact  that  no  technology  will  ever  guarantee  a  100% 
security,  but  at  the  same  time,  no  security  concept  is  thinkable  without  the  adequate 
technologies. A competitive EU security industry is the conditio sine qua non of any viable 
European security policy and for economic growth in general. 

Many EU security companies are still among the world leaders in most of the segments of 
the security sector, thanks to their level of technological development and their high quality 
manufacturing.  Recent  forecasts,  based  on  market  developments,  studies  and  industry 
predictions do however indicate that the market shares of European companies on the global 
market are bound to decrease constantly over the next years.5  

On  the  one  hand,  many  US  companies  are  still  the  technological  front  runners,  they 
additionally also benefit  from  a harmonised  legal  framework and a robust internal market. 

See  for  example  Global  Risks  2011,  Sixth  Edition,  An  Initiative  of  the  Risk  Response  Network, 

See  Sandler,  T.  and  W.  Enders  (2004).  "An  Economic  Perspective  on  Transnational  Terrorism" 

1 
World Economic Forum, January 2011. 
2 
European Journal of Political Economy 20(2): 301-316. 
See  also  Report  for  Congress  "The  Economic  Effects  of  9/11:  A  Retrospective  Assessment"  (see: 
HTTP://WWW.FAS.ORG/IRP/CRS/RL31617.PDF) 
3 
See: http://www.eos-eu.com/LinkClick.aspx?fileticket=y0rpzCaYh7o=&tabid=318 
4 
For  statistics  relating  to  disaster  in  Europe  see  Annex  I  of  SEC(2009)202,  Impact  Assessment 
accompanying  the  Communication  on  'A  Community  approach  for  the  prevention  of  natural  and  man-made 
disasters'. 
5 

See: HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM  

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This gives them not only a reassuring basis but also the benefit of a clearly recognised and 
distinguishable US brand, which proved to be a highly valuable advantage compared to EU 
companies in terms of international competition.  

On the other hand, the Asian countries such as China are closing the technological gap that 
separates them from EU companies at an alarming rate. Without a technological advantage, 
the  EU  companies  will  be  confronted  with  a  nearly  insurmountable  competition,  as  the 
discrepancy in terms of production costs is largely disadvantageous for EU companies.  

Industry and market forecast studies predict that the current market share of EU companies 
in the security sector could drop from roughly 25% in 2010 of the world market to 20% in 
2020, if no action is launched to enhance the competitiveness of the EU security industry.6 

In  response  to  these  challenges,  the  Commission  made  the  security  industry  one  of  the 
essential parts of the EU 2020 flagship initiative "An Industrial Policy for the Globalisation 
Era Putting Competitiveness and Sustainability at Centre Stage ".7 Therein the Commission 
announced to launch a dedicated initiative on a Security Industry Policy. 

This Commission Services Staff Working Document is the result of a dedicated analysis by 
the services of DG ENTR on possible areas and measures where the EU could launch policy 
initiatives in support of the EU security industry. It should be noted that this Document will 
not be followed by any legislative proposal.  

Any possible future legislative policy measure on the Security Industry will be preceded by 
a dedicated Impact Assessment as well as thorough stakeholder consultations. 

1.2. 

Consultation and expertise 

External expertise 

In  the  context  of  this  analysis,  three  different  studies  were  commissioned  to  an  external 
contractor8: 

• 

• 

• 

Competitiveness of the EU Security Industry; 

Regulatory Framework and Certification/Conformity Assessment Procedures in the 
Security Sector (referred to as SECERCA study in the footnotes); and 

Pre-commercial Procurement in the field of Security. 

A further study on the civil-military synergies in the field of security is currently in its final 
stages.9 In addition, a previous study undertaken by DG ENTR on "Industrial implications in 
Europe of the blurring of the dividing lines between Security and Defence"10 was also used. 

These  estimations  are  based  on  the  studies  performed  by  ECORYS  and  on  estimations  made  by 

6 
Visiongain and HSRC 
7 
See: 
POLICY/INDEX_EN.HTM 
8 
The 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM  . 

three  studies  can  be  found  on 

the  website  of 

HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/INDUSTRIAL-COMPETITIVENESS/INDUSTRIAL-

the  FP7  security  research 

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A highly valuable contribution in the understanding of these issues is the work of the FP7 
(7th  Framework  Programme,  a  list  of  acronyms  used  in  this  report  is  contained  in  the 
annexes) research project EUSECON (A New Agenda for European Security Economics)11. 
This  project  analyses  the  economic  and  social  costs  of  terrorist  attacks  and  anti-terror 
policies. 

Stakeholder Consultation 

A  number  of  stakeholders  were  consulted  throughout  the  analytical  process,  through  both 
public and targeted processes.  

An online public consultation was held from the 14th of March until the 15th of May 2011. 
The  Commission  received  in  total  59  responses  to  this  public  consultation.  It  should  be 
underlined that despite the relatively low number of participants, all the relevant actors and 
stakeholders  of  the  security  sector  participated.  Contributions  were  received  from 
stakeholders  in  13  countries  (one  additional  participant  did  not  specify  his  country  of 
origin),  including  2  EFTA  countries.  The  respondent's  background  was  spread  over  the 
following  areas:  large  enterprises  32%,  business  associations  22%,  SME's  19%,  national 
administrations  7%  and  NGO's  7%.  The  results  of  the  public  consultation  can  be  found 
throughout  this  Staff  Working  Document  and  under  the  Annex  2  "Results  of  the  Public 
Consultation".12 

A  series  of  targeted  consultations  were  also  held  in  the  context  of  conferences  and 
public/private debates. 

• 

• 

• 

On  9  February  2011,  a  "High  Level  Public-Private  Security  Roundtable"  was 
organised  by  the  main  European  business  association  for  security  companies,  the 
European Organisation for Security (EOS) together with the Commission.13 

A further consultation took place on the 23rd of May, the "High Level Conference 
Defence and Security Industries and Markets" which was organised by VP Tajani 
and Commissioner Barnier.14 

On 29 September 2011 a Workshop was organised with CEN, CENELEC and ETSI 
on standardisation in the security area. A summary can be found in Annex 1. 

Once finalised, the study will be made available at: 

9 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM     
10 

See: 
HTTP://EC.EUROPA.EU/ENTERPRISE/SECTORS/DEFENCE/FILES/NEW_DEFSEC_FINAL_REPORT_EN.PD
F  
See: HTTP://WWW.ECONOMICS-OF-SECURITY.EU/EUSECON  

11 
12

See:HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/FILES/DOC/PUBLIC_CONSULTATION/R
ESULTS_OF_THE_PUBLIC_CONSULTATION_ON_AN_INDUSTRIAL_POLICY_FOR_THE_SECURITY_INDUSTRY_E
N.PDF  
13 
HTTP://EC.EUROPA.EU/AVSERVICES/SERVICES/SHOWSHOTLIST.DO?OUT=PDF&LG=EN&FILMREF=75367 
and HTTP://WWW.EOS-EU.COM/LINKCLICK.ASPX?FILETICKET=YHFFMB11COE%3D&TABID=322  
14 
See: HTTP://EC.EUROPA.EU/ENTERPRISE/SECTORS/DEFENCE/CONFERENCE/INDEX_EN.HTM  

See: 

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• 

• 

• 

On  14  October  2011  a  Conference  on  "Competitiveness  through  Standardisation" 
was  held  in  Brussels.  One  of  the  round  tables  addressed  "Standards  as  a  tool  for 
security industrial policy", the results of which can be found in Annex 1. 

On  18  October  2011  a  Workshop  on  "Security  Industrial  Policy"  was  held  in 
Brussels, the results of which can be found in Annex 1. 

On  21  March  2012,  the  second  "High  Level  Public-Private  Security  Roundtable" 
was organised by the main European business association  for security companies, 
the European Organisation for Security (EOS) together with the Commission.15 

The  results  of  the  consultation  were  fully  supportive  regarding  the  initiative  of  the 
Commission.  The  main  aspects  of  the  problem  definition  were  fully  supported  by  a  large 
majority of the stakeholders, both from the public and the private sector (i.e. by ~ 80% of the 
respondents  of  the  public  consultation).  The  need  for  the  EU  to  launch  dedicated  policy 
initiatives to strengthen the EU security industry was also widely acknowledged (i.e. by 87% 
of the respondents of the public consultation).  

The minimum standards of the Commission for consultations have all been met. 

2. 

CONTEXT 

Security as a national prerogative 

The underlying problem faced by the EU security industry is that security policy is still very 
much a national prerogative, where Member States delegate a limited amount of authority to 
supra-national entities. 

This is emphasized even further by the diverging threat perceptions and assessments in the 
EU  Member  States.  Each  Member  State  has  its  own  specific  cultural  and  geopolitical 
background  which  directly  influences  its  security  priorities.  Some  countries  have  to  deal 
more  often  with  natural  disasters  like  earthquakes  or  large  forest  fires,  while  others  have 
repeatedly been the victims of terrorist attacks. 

However, the EU has already found ways to overcome this problem, for example in the area 
of  airport  security,  where  whilst  it  is  left  up  to  Member  States  to  use  certain  screening 
equipment or not, if they use it they have to follow performance requirements set by the EU. 

The  issue  of  diverging  threat  assessments  among  the  Member  States  has  already  been 
addressed  by  the  Commission  Communication:  "The  EU  Internal  Security  Strategy  in 
Action: Five steps towards a more secure Europe", which called for a common all-hazards 
approach to threat and risk assessment: "The  EU should establish by 2014  a coherent  risk 
management policy, linking threat and risk assessment to decision making."16 

Policy developments 

15 
16 
2014/MALMSTROM/ARCHIVE/INTERNAL_SECURITY_STRATEGY_IN_ACTION_EN.PDF  

See: HTTP://WWW.EOS-EU.COM/DEFAULT.ASPX  
See: HTTP://EC.EUROPA.EU/COMMISSION_2010-

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So  far,  the  main  initiative  addressing  the  issue  of  security  industrial  policy  in  the  EU  has 
been  the  “European  Security  Research  and  Innovation  Forum  (ESRIF)”.17  Between  2008 
and  2009  more  than  600  experts  on  security  worked  on  an  extensive  analysis  of  the  EU 
security  sector,  in  particular  regarding  the  medium  and  long-term  challenges  that  Europe 
faces. 

The  final  report  of  ESRIF  was  adopted  on  23rd  November  200918,  providing  a  list  of  key 
messages, recommendations and an extensive list of security research topics for the EU over 
the  next  20  years,  called  the  “European  Security  Research  and  Innovation  Agenda”.  The 
work of ESRIF provided the EU policy makers with a knowledge base for the measures to 
enhance the security of its citizens.19 

The  Commission  subsequently  published  on  21  December  2009  a  Communication  setting 
out the Commissions' initial position on ESRIF's key findings and recommendations20 The 
Communication  emphasised  for  the  first  time  the  need  for  an  industrial  policy  for  the 
security sector. 

3. 

PROBLEM DEFINITION  

3.1.  Market overview 

3.1.1.  Overview on the scope of the analysis 

Defining the exact scope of the security industry is a difficult task: 

Firstly,  the  security  industry  is  not  covered  as  such  by  the  main  statistical  nomenclatures 
(NACE,  Prodcom,  etc.).  The  production  of  security-related  items  is  hidden  under  a  wide 
range  of  industry  and  services  headings.  Statistics  for  these  headings  don't  distinguish 
between security and non-security related activities.  

Secondly, ‘security’ is not a stable concept. It varies with changes in the perception of new 
threats. The scope of the security industry changed after 9/11, to encompass new anti-terror 
activities; more recently cyber-crime came to the forefront.  

Thirdly, from a supply-side perspective, procurers of security equipment and systems can be 
reluctant to provide information on security expenditures. 

The definition of security industry used in the context of this Staff Working Document is the 
result of a cross-analysis of the most commonly used typologies of the security industry (i.e. 
the scope used by previous studies on the security industry (inside and outside of the EU), 
the  scope  of  the  FP7  Security  Theme  as  well  as  the  scope  of  the  US  Department  of 
Homeland  Security  (DHS)).  This  resulted  in  the  categorisation  of  the  2009  Commission 
study on the "Competitiveness of the EU security industry".21 

See: COM(2009)691 final. 
See: HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/FILES/ESRIF_FINAL_REPORT_EN.PDF  
The  executive  summary  of  ESRIF  can  be  found  in  the  General  Annexes  to  this  report:  Table14: 

17 
18 
19 
Executive summary of the "European Security Research and Innovation Forum" 
20 
21 

COM(2009) 691 final. 
See: HTTP://EC.EUROPA.EU/ENTERPRISE/NEWSROOM/CF/_GETDOCUMENT.CFM?DOC_ID=5579 

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The EU security industry can broadly be subdivided into the following sectors: 

• 

• 

• 

• 

• 

• 

• 

aviation security; 

maritime security; 

border security; 

critical infrastructure protection; 

counter-terror intelligence (including communication); 

physical security protection; and 

protective clothing. 

A list of illustrative examples for the different sectors encompassed in the security industry 
can be found in Annex 3. 

3.1.2.  Relative market size and employment figures 

In the table below are some more details on the relative market size of the different sectors. 

Table  1:  Relative  market  size  of  the  global  and  European  security  industry  markets 
(indicative € estimates by sector) 22  

SECURITY INDUSTRY  

Sectors 

Aviation security 

Maritime security 

Border security 

Critical infrastructure protection 

Counter-terror intelligence 

Physical security protection* 

Protective clothing (first responders) 

EU  security  market 
(low estimate) 

EU  security  market 
(high estimate) 

Global 
market estimate 

security 

€ 1.5 bn 

€ 1.5 bn 

€ 4.5 bn 

€ 2.5 bn 

€ 4.5 bn 

€ 10 bn 

€1.5 bn 

€ 2.5 bn 

€ 2.5 bn 

€ 5.5 bn 

€ 3.5 bn 

€ 5 bn 

€ 15 bn 

€ 2.5 bn 

€ 5.2 bn 

€ 6.7 bn 

€ 9.9 bn 

€ 12.6 bn 

€ 19.4 bn 

€ 39.2 bn 

€10 bn 

TOTAL MARKET SIZE 

€ 26bn 

€ 36.5 bn 

€ 103 bn 

* It includes CCTV, access control equipment, intrusion and detection systems, etc. 

Source: ECORYS (2009) 

The  physical  security  protection,  a  traditional  security  market  based  on  general  security 
applications such as closed circuit TV (CCTV), access control, intrusion and fire detection, 
counts  for  nearly  40%  of  the  total  European  market,  with  a  market  value  ranging  from 
€10bn to €15bn.23 Border security as well as counter-terror intelligence are both estimated 
to,  at  least,  represent  €4.5bn  of  the  European  security  market,  while  critical  infrastructure 
protection  has  a  market  value  within  a  €2.5bn  to  €3.5bn  interval.  Last  but  not  least,  the 

22 
23 

See: HTTP://EC.EUROPA.EU/ENTERPRISE/NEWSROOM/CF/_GETDOCUMENT.CFM?DOC_ID=5579 
See General Annexes: Figure 2 Public-private involvement in 'traditional' and 'new' security markets 

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aviation  and  maritime  security  sectors  are  both  estimated  to  have  a  market  value  ranging 
from  €1.5bn  to  €2.5bn.24  The  tables  in  the  general  annex  (tables  7  and  8)  give  a  more 
detailed  view  on  the  strengths  and  weaknesses  of  the  EU  security  industry  in  the  most 
relevant  areas  (Overview  of  market  characteristics  for  specific  equipment  segments  and 
SWOT analysis of the European Security Industry). 

The  global  security  market  is  worth  some  €100bn  (2008  figure)  with  around  2  million 
persons employed worldwide in the security industry. The European security market has an 
estimated market value in the range of €26bn to €36.5bn (2008 figure).2526 

From  a  global  perspective,  North  America  (mainly  the  US)  is  the  largest  security  market, 
with  a  current  market  share  of  around  40%  or  more.  Europe  is  ranked  2nd  in  the  global 
security market, with a market share ranging approximately from 25% to 35%. Despite the 
financial crisis, global demand for security equipment is expected to grow at a minimum of 
around  5%  per  annum,  with  the  fastest  growth  in  coming  years  expected  to  be  mainly  in 
Asia and the Middle-East.27 

As regards employment in the security industry, it is estimated that around 180,000 persons 
work in the EU in the security industry (2011 figure). This figure includes 130,000 working 
directly  for  the  security  industry  and  another  50,0000  induced  or  secondary  markets  (i.e. 
subcontractors).28  

3.1.3.  Distinctive features of the security market  

The  EU  security  market  consists  of  products/technologies  and  services.  As  present  studies 
and stakeholder opinions have shown the main pressure of global competition will lie on the 
products/technologies sector as those form the vast majority of contemporary and potential 
future security related exports. The main question for security service providers will rather 
be whether they would still have access to EU made products/technologies in the future to 
foster and maintain the quality of their business or whether they would have to acquire these 
from the EU’s competitors.  

The security market has three distinctive features which differentiates it from the majority of 
the  other  industrial  sectors.  That  is  not  to  say  that  these  features  are  not  also  common  to 
other  markets,  they  are  however  especially  pronounced  in  the  security  markets,  which  is 
largely due to the national sensitivities on security matters. 

(1) 

Fragmentation  of  the  market  along  national  or  even  regional  boundaries: 
Security,  being  one  of  the  most  sensitive  policy  fields,  is  one  of  the  areas  where 

See: "Study on the Competitiveness of the EU security industry", chapter 2.3 "Market size estimates 

24 
for the security sector": 
HTTP://EC.EUROPA.EU/ENTERPRISE/NEWSROOM/CF/_GETDOCUMENT.CFM?DOC_ID=5579 
25 
See table below: " Relative market size of the global and European security industry markets"  
26 
For  a  country  study,  see  for  example  a  study  financed  by  the  German  Ministry  of  Economics  and 
Technology "Marktpotenzial von Sicherheitstechnologien und Sicherheitsdienstleistungen - Thema: Der Markt 
für  Sicherheitstechnologien  in  Deutschland  und  Europa  -  Wachstumsperspektiven  und  Marktchancen  für 
deutsche Unternehmen Schlussbericht", Berlin 2009. 
27 
28 
Commercial Procurement in the field of Security (see in particular page 58) and EOS. 

See: General Annexes: Table 1:Summary table: Main competitors 
Figures are based on the study on the Competitiveness of the EU Security Industry, the Study on Pre-

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Member States are hesitant to give up on their national prerogatives29. This means 
in concrete terms: 

Higher barriers to entry than in other sectors, in particular: 

• 

• 

higher  investment  costs  associated  with  technology  development  and,  also, 
with the transition from technology development to placing a product on the 
market.  This  is  even  more  aggravated  by  the  fact  that  in  the  security  area 
there is often an asymmetric level of knowledge between the demand side and 
the supply side, thus making it difficult to bring research results quickly to the 
market. 

higher  costs  associated  with  securing  markets  (e.g.  lobbying,  marketing, 
commercial  diplomacy).  An  important  aspect  to  this  is  related  to  needs  to 
‘educate’ clients on technological possibilities and choices.  

Societal/ethical  dimension:  While  security  is  one  of  the  most  essential  human 
needs,  it  also  is  a  highly  sensitive  area.  Security  measures  and  technologies  often 
provoke the fear of a possible endangerment of privacy. Any attempt to introduce a 
security  solution  that  could  violate  ethical  values  would  lead  to  fierce  societal 
reaction.3031 

Institutional  market:  In  large  parts  the  security  market  is  still  an  institutional 
market, i.e. the buyers are public authorities. Even in areas where it is a commercial 
market, the security requirements are still largely framed through legislation. 

(2) 

(3) 

SMEs  typically  play  only  a  limited  role  in  the  security  market  and  are  often  restricted  to 
highly  specialised  ‘niche’  segments.  Where  SMEs  are  able  to  successfully  develop 
innovative technologies it is usually the case that – as a result of the high barriers to entry 
noted  above  –  they  tend  to  license  this  technology  to  larger  players  (e.g.  dedicated 
equipment integrators) rather than try to enter markets independently; alternatively they may 
simply be acquired by such players. 

The SMEs present in the security sector often have limited access to the market for larger 
scale public (and quasi-public) and major private security equipment and systems contracts. 
It appears difficult for SMEs to grow significantly.32  

An  example  for  this  can  be  found  in  a  case  study  financed  by  the  Austrian  Ministry  for 
Transport,  Innovation  and  Technology  (bmvit).33  Whilst  the  average  increase  of  turnover 

This  was  already  clearly  underlined  in  the  Commission's  Communication  on  ESRIF's  key  findings 

29 
and recommendations (COM(2009) 691 final, see in particular page 4. 
30 
See: HTTP://WWW.ESCI.AT/EUSIPO/ASP14.PDF  
31 
This  was  already  clearly  underlined  in  the  Commission's  Communication  on  ESRIF's  key  findings 
and recommendations (COM(2009) 691 final, see in particular page 3. See also: "A comprehensive approach 
on personal data protection in the European Union" COM(2010) 609 final 
HTTP://EC.EUROPA.EU/JUSTICE/NEWS/CONSULTING_PUBLIC/0006/COM_2010_609_EN.PDF  
32 
See:  HTTP://EC.EUROPA.EU/ENTERPRISE/NEWSROOM/CF/_GETDOCUMENT.CFM?DOC_ID=5579,  as 
well as "Ex-post Evaluation of the Preparatory Action for Security Research (PASR) - Interim Evaluation of 
FP7 Security Research – Final Report, January 2011", at:  
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/FILES/DOC/INTERIM_EVALUATION_OF_FP7_SECURI
TY_EX_POST_PASR_FINAL_REPORT_EN.PDF  

EN 

11 

   EN 

 
                                                 
between 2007 to 2009 for companies active in the sector of critical infrastructure protection 
(as one “core-group” of the security industry) was at 19.2 %, the turnover for the 15 largest 
companies increased by 32.2%. 

3.1.4.  Competitiveness of the EU security industry 

The estimations on the general market evolutions detailed in this analysis are based on the 
results  of  the  four  studies  launched  by  the  Commission  services  as  well  as  on  industry 
forecasts. 

The  Commission  services  will,  in  order  to  remedy  this  lack  of  data,  develop  an  empirical 
basis  on  which  more  reliable  figures  on  the  security  markets  could  be  established. 
Cooperation with EUROSTAT as well as the main trade associations is essential to such an 
undertaking. The 2009 study on the competitiveness of the EU security industry could serve 
as an initial starting point for such an analysis. 

The current market situation  

To this date, the competitiveness of the EU industry is acceptable in a number of segments. 
EU  companies  are  still  among  market  leaders  and  benefit  from  a  relative  technological 
advantage and  high  quality manufacturing compared to some of the emerging  countries in 
Asia. The forecasts made by the EU security industry on the future competitiveness of the 
EU security companies are however less encouraging.  

The EU is not in a position of being the sole producer of certain innovative technologies nor 
can  it  sell  technologies  at  prices  below  those  of  the  US  and  Chinese  competitors.  Chinese 
companies are closing the technological gap that separates them from EU and US companies 
at an increasingly fast rate.34 These prospects are further darkened by the reality that few if 
any EU company will be able to compete on an equal level with Asian companies in terms 
of production cost. 

Illustration on burglar and fire alarms: 

A  concrete  example  for  this  evolution  is  the  segment  of  burglar  and  fire  alarms.  EU 
companies are among the front runners in the world wide competition and have generated 
considerable benefits in terms of external trade. The recent market evolutions as well as the 
stakeholder  consultations  do  however  reveal  a  rather  bleak  outlook.  As  shown  in  the  two 
tables  below,  the  trade  balance  and  the  competitive  advantage  of  EU  companies,  after 
having peaked in 2009, is now facing a progressive decline. 

It should be noted that the alarm systems represent a highly important segment in terms of 
economic  size,  with  a  market  size  of  EUR  4.5  Billion  or  50%  of  the  physical  security 

(2010): 

"Studie 

PlanConsult  Holding 

33 
Sicherheitswirtschaft und deren Entwicklung 2007 bis 2010 (ohne Bewachungsunternehmen)" 
34 
A  current  example  for  this  development  is  the  Chinese  producer  of  scanning  equipment  Nuctech, 
created in 1997, which is pushing strongly on the worldwide market as a direct competitor of EU companies. 
In  general  terms,  China  is  encouraging  the  development  of  home-grown  technologies,  ranging  from  radio 
communication to body scanners. 
See: HTTP://BLOGS.WSJ.COM/CHINAREALTIME/2011/04/22/INVASION-OF-THE-CHINESE-BODY-SCANNERS/  

österreichischen 

das  Potenzial 

betreffend 

der 

EN 

12 

   EN 

 
                                                                                                                                                      
market. A detailed analysis of the competitiveness of this industry segment can be found in 
the attached Annex 7 "Competitiveness proofing – two illustrative examples". 

EN 

13 

   EN 

 
EU external trade in burglar and fire alarms: total value ($US million) 

Year 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

Total extra-EU exports 

Total extra-EU imports 

Trade Balance 

217.4 

256.0 

304.0 

314.7 

378.0 

497.3 

660.1 

665.3 

599.1 

355.6 

398.0 

453.3 

497.5 

576.5 

579.9 

608.6 

554.8 

602.0 

-138.2 

-142.1 

-149.3 

-182.8 

-198.5 

-82.6 

51.5 

110.5 

-2.9 

(source: ECORYS 2011) 

EU Revealed Competitive Advantage (RCA) index for burglar and fire alarms 

(source: ECORYS 2011) 

The main competitors  

The main competitors of the European security companies often have a vast internal market 
and/or a very favourable regulatory framework.35 The strongest player and most important 
competitor for the EU is the United States. The US is not only the biggest market, but US 
companies are often technical frontrunners in high-end security equipment.36  

35 
36 
companies. 

See: General Annexes: Table 2: Breakdown US security industry market 
See General Annexes: Tables 2-4 for detailed information on the US security market and the main US 

EN 

14 

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Illustration on airport screening equipment: US comparison 

The US represents the main competitor to the EU in the aviation security screening sector - 
and  for  the  security  industry  in  general  –  and  is  the  largest  single  market  for  aviation 
security  equipment  and  systems.  In  terms  of  factors  shaping  the  business  environment  for 
suppliers  of  aviation  security  screening  equipment  and  systems,  two  features  of  the  US 
situation are of particular relevance: 

• 

• 

A  single  Federal  authority  –  the  Transport  Security  Administration  (TSA)  –  is 
responsible  for  setting  the  approach  to  aviation  security  and  technology  adoption, 
for  determining  performance  requirements,  for  evaluating  and  approving  security 
equipment and, finally, for the procurement and deployment of equipment.  

The SAFETY Act provides for the reduction of liability risks for manufacturers and 
technologies.  Further  DHS  designation  and 
distributors  of  anti-terrorism 
certification37 under the Act provides de facto approval of security equipment and 
technologies that is recognised in global markets.  

Compared to the present EU situation, the US market is characterised by: 

• 

• 

• 

• 

Lower  costs  of  supplying  the  market,  both  in  terms  of  the  costs  associated  with 
compliance (conformity assessment) and approval (certification) of equipment and 
systems, and more generally for securing markets.  

Lower  uncertainty  over  the  potential  market  size  for  new  security  products  and 
technologies;  there  is  a  single  US  position  on  the  utilisation  of  technologies  and 
performance standards/requirements. 

Lower  risk  attached  to  investments  in  research,  technology  development  and 
innovation  activities,  both  because  of  more  certain  market  potential  and  liability 
situation. 

Shorter ‘time to market’ for new security technologies and innovations. 

A  detailed  analysis  of  the  competitiveness  of  this  industry  segment  can  be  found  in  the 
attached Annex 7 "Competitiveness proofing – two illustrative examples". 

Israeli and Japanese companies have a strong position in high-end security equipment, but 
mainly  cover  specific  niches  such  as  IT  and  communication  security.  The  Chinese  and 
Russian  markets  show  strong  growth  rates  in  the  traditional  physical  security  protection 
segment (CCTV, access control). However, Chinese and Russian companies produce mainly 
low-end  security  equipment  and  do  not  yet  compete  with  the  high-end  oriented  EU 
companies.38 

37

The Act provides for two levels of approval: (i) designation and a qualified anti-terrorism technology 

and, for more mature technologies, (ii) certification as a DHS approved product. 
38 

See General Annexes: Table 1:Summary table: Main competitors 

EN 

15 

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China 

General overview 

The  US  Commercial  Service  estimated  that  the  Chinese  safety  and  security  market 
generated  a  turnover  of  €13.5  billion  ($17  billion)  in  2006.  Another  source  estimated  the 
turnover of the security market (without surveillance) to be €27 billion ($34 billion) in 2006. 
Given  the  relatively  high  growth  rates  of  the  Chinese  economy  (despite  the  2008/2009 
economic crisis) the growth expectations for the safety and security market are high. The US 
Commercial Service expected (in 2008) a turnover of €22.7 billion ($28.5 billion) in 2010. 

The  main  drivers  for  demand  are  China’s  growing  economy  and  massive  construction 
projects  (especially  in  the  Eastern  coastal  area),  as  well  as  demand  from  the  public 
authorities.  The  US  Commercial  Service  reports  that  sophisticated  surveillance  equipment 
(mainly for monitoring and controlling access) is widely used in high-end residential areas 
and commercial office buildings. The 9/11 attacks lead to a stronger awareness for security 
protection.  The  government  strengthened  their  anti-terrorism  measures  (especially  in 
relation  to  air  security)  and  surveillance  and  monitoring  equipment  is  widely  used  in 
seaports, railways and airports (protecting cross-border shipments of goods and passengers). 

Main fields of activity 

Three main fields of activity can be identified within the Chinese safety and security market, 
which are video surveillance, door access, and burglar-proof alarm equipment. 

The (members of the) China Security and Protection Industry Association (CSPIA)  covers 
also other types of security equipment, like biometrics, IT security, cash in transit, critical 
infrastructure protection, physical/barrier protection and transport and aviation security. 

Japan 

General overview 

Currently,  security  is  an  important  public  concern  in  Japan  and  the  size  of  the  security 
industry is growing fast. In its analysis of the Japanese security industry, the US commercial 
Service indicates that this public concern is related to very high crime rates (mainly related 
to burglary), but also credit card and e-mail scams and identity theft. The size of the total 
Japanese  security  industry  (including  both  the  sales  and  installation  of  security  equipment 
and security services) is estimated at a projected size of 4.6 billion ($5.7 billion) in 2010. 

Main fields of activities 

the  security  equipment  market. 
Five  main  segments  can  be 
Image/monitoring  and  access  control  were 
in  2005  while 
leading  markets 
image/monitoring equipment as well as sensors are the main expected growth segments. The 
US Commercial Service observes that school and town security (emergency alert systems) 
and  also  regional  safety  (mass  notification  systems)  are  emerging  sub-segments  (with  a 
projected size in 2008 of €78 million). 

identified  within 
the 

EN 

16 

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Israel 

General overview 

Given the unstable political situation in the Middle-East and direct terrorist threats, security 
is a top priority in Israel. Both the defence and homeland security (HLS) industry are seen as 
a fundamental part of the national security of Israel. At the same time, HLS knowledge and 
experience is more and more seen as an interesting export product. 

Several (government related) websites promote the Israeli HLS sector as an important trade 
and  investment  opportunity  for  foreign  countries.  The  Investment  Promotion  Center  (IPC, 
part  of  the  Ministry  of  Industry,  Trade  and  Labor),  for  example,  identifies  HLS  &  Public 
Safety as one of the main business sectors for investment, stating that ‘Israel has earned a 
worldwide reputation for providing leading security solutions’. 

The  annual  HLS  industry  turnover  (2008)  is  approximately  €2.7  billion  ($4  billion). 
Approximately 25% of that turnover is related to export of security products. It is assumed 
that the HLS (including surveillance, see below) is comparable to the turnover of the Israeli 
military and defence industry (€4 billion / $5 billion in 2006). Employment within the HLS 
industry is estimated at 25,000 people, being therefore slightly smaller than the military and 
defence industry (35,000 employees). 

Main fields of activity 

The HLS industry covers a whole range of security areas. The Israel Export & International 
Cooperation  Institute  (IEICE)  identifies  twelve  main  areas  such  as  access  control, 
commodity  protection,  identification  /  authentication,  IT  security  &  software,  perimeter 
protection and tracking and motion detection; while the IPC also stresses aviation, maritime 
& transportation security, counter terrorism, CBRN and critical infrastructure protection. 

Russia 

General overview 

The  estimated  value  of  the  total  Russian  security  market  (including  security  services  and 
equipment)  was  approximately  €4.5  billion  ($5.6  billion)  in  2006.  Approximately  20%  of 
this  total  relates  to  the  security  equipment  market  (€1.1  billion  in  2006).  The  rest  of  the 
security  market  is  mainly  related  to  security  services  (guarding  services  and  physical 
protection). The Russian market shows high annual growth rates. 

Main fields of activity 

Within  the  safety  and  security  equipment  market,  four  key  segments  can  be  identified, 
namely  CCTV  &  video  surveillance,  security  &  fire  alarm,  intruder  alarm  &  perimeter 
protection,  and  access  control.  The  CCTV  segment  is  seen  as  the  most  developed  and 
competitive sector. For the coming years, the CCTV and access control systems are the most 
promising segments in terms of growth expectations. 

EN 

17 

   EN 

 
 
 
A crucial competitive advantage that mainly concerns US companies is the benefit of a large 
home market. Having a harmonised market of over 310 million inhabitant's guarantees US 
companies access to a stable and reliable market, which in turn allows them to gain a critical 
mass  and  increases  their  competitiveness  in  terms  of  price  and  costs.  The  large  and  well 
known US market also gives these companies the advantage of "brand recognition".  

For example, a large number of different standards and certification procedures exist in the 
EU alone for airport screening equipment. The US has only one. US companies can state for 
instance that their airport scanners are used in hundreds of airports in a country of over 300 
million inhabitants. US manufacturers thus have a better and clearer reputation on a global 
scale than an EU manufacturer that can only refer to his comparatively small market. 

This lack of a similar "EU brand" is especially critical if one considers that the central future 
markets  for  security  technologies  will  not  be  in  the  Western  Hemisphere  but  in  emerging 
countries in Asia and the Middle East. To cite just some examples: China plans to build 80 
new  Airports  by  2020,  many  major  sports  events  (which  are  typically  huge  markets  for 
security  technologies)  will  take  place  in  Asia  such  as  the  2018  Winter  Olympics  in 
Pyeongchang (South Korea) and the 2022 FIFA World Cup in Qatar. 

Stakeholder contribution on this issue, taken from the Public Consultation 

"An  EU-wide  accepted  certification  scheme  with  one  unique  label  (e.g.  CertAlarm  -> 
www.certalarm.org) in all Member States with the withdrawal of all national marks would 
allow the European security industry to present a united front on the global market." 

3.2. 

The main problems of the security sector in the EU and their drivers39 

The  main  problems  of  the  EU  security  industry  are  the  highly  fragmented  nature  of  the 
EU security markets, the difficulty in closing the gap between research and market and 
the uncertainty of societal acceptance for security technologies. 

3.2.1. 

 The fragmentation of the EU security markets 

The  main  challenge  the  European  security  industry  faces  today  is  the  highly  fragmented 
nature of the EU security market. Divergent approaches have effectively led to the creation 
of  27  different  security  markets.  This  situation  is  not  only  an  anachronistic  rarity  in  the 
European  Union,  it  has  also  several  negative  consequences  both  for  the  supply  and  the 
demand side: 

Supply side: 

• 

Commonly  existing  high  barriers  to  market  entry  are  considerably  aggravated, 
particularly at the ‘high-end’ of the ‘new’ security market40. Instead of having just 
one  central  market  to  address  to,  the  security  companies  have  to  multiply  their 
efforts  associated  with  securing  markets  by  27,  which  considerably  raises  the 
technologies41.  These 
investment  and  commercialisation  costs  of  security 

39 
40 
41 
equipment under "chapter 7.1 Market Fragmentation" of this Staff Working Document. 

A problem tree can be found in Annex 6 "Structure of the Problem Definition". 
See Figure 2 of the General Annexes. 
See  the  illustrative  example  given  on  "Conformity  assessment  and  certification  of  screening 

EN 

18 

   EN 

 
                                                 
disproportionate  burdens  often  discourage  the  security  industry  (and  SMEs  in 
particular) to go beyond their national borders42. 

• 

True economies of scale can therefore not be realised which aggravates further the 
fragmentation  of  the  market  and  weakens  the  competitiveness  of  the  security 
industrial  base.  This  fragmentation  forced  industry  in  some  cases  to  foresee 
different product configurations for different target markets. 

Demand side: 

• 

• 

National orientation of the security companies leads to a lack of competition among 
suppliers  and  users  of  security  products  are  therefore  not  always  able  to  buy  the 
best security products at the lowest price.  

Eventually the demand side is forced to purchase a less controversial product which 
does  however  not  entirely  fulfil  the  technological  requirements.  In  the  end  the 
demand-side  has  to  opt  for  products  that  do  not  necessarily  meet  the  initial 
technical requirements 

Stakeholder  contribution  on  this  issue  from  a  business  association  taken  from  the  public 
consultation: 

"Market  fragmentation  and  the  absence  of  a  real  European  market  results  in  high  cost 
structures  and  therefore  high  costs  for  the  Society.  Within  a  harmonised  market  larger 
quantities could lead to better cost recovery in procurement and sales." 

It should be noted that the level of fragmentation of the EU security markets is not equal to 
the usual fragmentation that can be found across other industrial sectors in Europe. Almost 
every industrial sector is characterised by some degree of fragmentation, the large majority 
does  however  have  at  least  some  common  denominators,  be  it  EU  wide  standards, 
harmonised certification systems or procedures of mutual recognition. 

Producers  of  airport  screening  equipment  are,  for  instance,  faced  with  over  15  different 
certification procedures. This means that a producer of such technologies has to modify his 
product, in some cases substantially, if he wants to access new markets. This high degree of 
fragmentation  has  subsequently  prohibited  the  creation  of  an  internal  market  for  security 
technologies.  The  only  sector  where  a  similar  level  of  fragmentation  can  be  found  is  the 
defence sector.  

This  particularity  of  the  EU  defence  and  security  markets  had  been  clearly  laid  out  in  the 
Impact  Assessment  that  accompanied  the  proposal  for  Directive  2009/81/EC  on  the 
coordination  of  procedures  for  the  award  of  certain  works  contracts,  supply  contracts  and 
service contracts by contracting authorities or entities in the fields of defence and security.43 

42 
A  security  company  will  often  focus  only  on  its  own  national  market,  not  because  of  a  lack  of 
demand, but simply because it is not economically viable to repeat the same onerous procedure up to 27 times. 
This led in turn the EU security industry to be mostly nationally or even regionally oriented. 
43 
Impact 
HTTP://EC.EUROPA.EU/INTERNAL_MARKET/PUBLICPROCUREMENT/DOCS/DEFENCE/IMPACT_ASSESSMENT_E
N.PDF  

Assessment 

particular 

copy 

page 

See 

this 

11) 

(in 

at: 

of 

EN 

19 

   EN 

 
                                                 
This  negative  effect  of  the  fragmentation  on  the  EU  security  markets  was  also 
unambiguously  underlined  in  the  above  mentioned  Commission  Communication  "A 
European  Security  Research  and  Innovation  Agenda  -  Commission's  initial  position  on 
ESRIF's  key  findings  and  recommendations":  "The  security  industry  in  Europe  needs  to 
become  more  competitive  and  efficient.  Up  to  now  the  industry  suffered  from  the 
fragmentation of the markets that lead them to be nationally or even regionally oriented."44 

The  specificity  of  the  high  degree  of  fragmentation  of  the  Security  Industry  has  also  been 
acknowledged  and  criticised  throughout  the  stakeholder  consultations  organised  by  the 
Commission services. 

Stakeholder  contribution  on  this  issue  from  a  Member  State  taken  from  the  public 
consultation: 

"La sécurité : un secteur à part entière 

Trop  souvent  associé  à  d’autres  domaines  connexes,  le  secteur  de  la  sécurité  se  distingue 
pourtant de ceux-ci à de nombreux égards. Il est ainsi caractérisé par : 

Une fragmentation importante de l’offre 

[…] 

Une fragmentation plus importante encore de la demande 

Admis  depuis  déjà  de  nombreuses  années,  ce  constat  ne  semble  malheureusement  pas 
s’améliorer.  Ainsi,  la  demande  est  toujours  caractérisée  par  d’une  part  des  utilisateurs 
finaux  publics  (police,  gendarmerie,  sécurité  civile,  pompiers…)  très  éclatés  qui  se 
répartissent  sur  différents  niveaux,  du  local  jusqu’au  national,  et  à  travers  de  multiples 
services  opérationnels.  De  l’autre,  s’ajoute  également  les  opérateurs  qui  représentent  une 
part importante, voir peut-être majoritaire de la demande, et pour lesquels, trop souvent, la 
sécurité représente un investissement supplémentaire ainsi qu’une charge additionnelle sur 
ses opérations. 

Cette  fragmentation  est  encore  accentuée  au  niveau  européen  par  la  forte  disparité  des 
législations  nationales  et  des  sensibilités  vis-à-vis  des  libertés  et  droits  individuels  qui 
rendent  encore  plus  difficile  la  constitution  d’une  demande  plus  homogène  à  travers 
l’Europe. 

Ainsi,  force  est  de  constater  que  le  marché  intérieur  reste  encore  qu’un  concept  vague  et 
loin d’être réalisé dans le secteur de la sécurité." 

Underlying drivers of the market fragmentation 

Nearly  each  EU  Member  State  has  different  regulations  on  performance  standards45  and 
certification systems/conformity assessment46:  

(1) 

The  absence  of  clearly  defined  EU  wide  performance  standards  introduces 
uncertainties  for  equipment  providers  in  relation  to  the  expectations  of  customers 

COM 2009(691) final. 
Performance  standards:  Standards  establishing  a  set  of  minimum  requirements  to  be  fulfilled  by 

44 
45 
systems, equipments or procedures, for any use related to security. 
46 
to a product, process, service, system, person or body have been fulfilled. 

Conformity assessment: shall mean the process demonstrating whether specified requirements relating 

EN 

20 

   EN 

 
                                                 
regarding  required  performance  and,  in  turn,  for  determining  investments  in 
technology/product development47. 

EU illustrative example: 

Illustration: Secure Communications among police forces 

A  very  concrete  example  for  the  lack  of  EU  wide  performance  standards  is  the  issue  of 
secure cross border communication among police forces in the EU. Currently two different 
communication  systems  exist:  "TETRA"  and  "TETRA-POL".  The  lack  of  interoperability 
between the two systems leads to severe communication problems between police forces of 
adjacent Member States such as Portugal and Spain. In the case of the BENELUX countries 
cross border communication is still gravely hindered, even though the three countries all use 
the TETRA-POL standard, because of a lack of interoperability between the technologies of 
two different producers. This situation has led to a series of cross border incidents, which in 
turn initiated a number of FP7 security research projects.48 

The  participants  to  the  Public  Consultation,  independently  form  their  background  also 
largely supported this assessment. 

Responses  to  the  question:  Do  you  agree  that  the  lack  of  EU  wide  standards  for  security 
affects the market fragmentation?  

Respondent profile 

A business association 
A national administration 
An academic institution or think tank 
An individual 
Large enterprise (more than 250 
employees) 
Medium enterprise (between 50 and 249 
employees, turnover less than €50 million) 
Micro or small enterprise (fewer than 49 
employees, turnover less than €10 million) 
Non governmental organisation 
Other 
Regional or local administration 
Grand Total 

Do not 
agree at 
all 

1 

1 

Do not 
agree 

Agree 

2 

2 

1 

1 

6 

2 
2 

2 

1 

7 

Agree 
very 
much 
9 
2 
1 
1 

14 

3 

5 

1 
3 
1 
40 

Do not 
know 

1 

1 

3 

5 

(2) 

The absence of EU wide certification systems: No common system of certification 
exists  at  a  European  level  for  security  equipment  and  there  is  no  mechanism  of 
mutual recognition across countries49. A producer of security technologies has to go 

See: 

47 
HTTP://WWW.CEN.EU/CEN/SECTORS/SECTORS/SECURITY%20AND%20DEFENCE/SECURITY/PAGES/DEFAUL
T.ASPX  
48 
HTTP://WWW.DITSEF.EU/ 
49 
findings and conclusions": HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM      

See the SECERCA study, "chapter 3 Overview: current situation, key themes and issues, main 

See  for  instance:  the  project  EULER:  HTTP://WWW.EULER-PROJECT.EU/  and  the  project  DITSEF 

EN 

21 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
through the costly and lengthy certification processes for each and every country in 
which he wants to commercialise his technologies.50 

EU illustrative examples: 

Illustration: Conformity assessment and certification of screening equipment 

An industry source has indicated, for example, that the cost of a single test of an Explosive 
Detection System (EDS) could be in the region of €65 thousand and for a liquid explosive 
system  (LAGS)  the  figure  may  vary  from  €30  to  €75  thousand;  these  figures  relate  to  a 
single test procedure and do not take into account any repeat testing that may be required. 
The  aforementioned  products  are  relatively  small  systems  and  costs  associated  for  larger 
systems  are  reputed  to  be  significantly  higher  and  may  run  into  several  hundred  thousand 
Euros; for example, an amount of €100 thousand has been indicated for an ‘imaging test’ for 
a  cargo  scanner  while  a  figure  of  €500  thousand  has  been  indicated  for  the  cost  of  the 
certification process for a biometric identity card model.51 

Illustration: Conformity assessment and certification of alarm systems 

Currently a producer of a security alarm system seeking to supply their product throughout 
the EU will typically need to apply for 10-15 certificates from different Member States. The 
costs of certification of an alarm system are on average (with a large spread depending on 
the nature  of  the  product) at the level of EUR 200-300 thousand for full access to Europe 
including  all  tests.  Stakeholders  indicate  that  the  estimated  cost  for  obtaining  a  mutually 
recognised certificate for the same alarm system would amount to EUR 40-60k.  

The  negative  effect  of  the  lack  of  harmonised  certification/conformity  assessment 
procedures  for  security  technologies  on  the  market  fragmentation  was  also  widely 
acknowledged  by  all  the  participants  of  the  public  consultation,  be  they  from  national 
administrations, business associations, large enterprises or SME's. On the question "Do you 
agree  that  the  lack  of  harmonised  certification/conformity  assessment  procedures  for 
security technologies affects the market fragmentation" 80% of the participants agreed and 
only  5%  disagreed.52  More  detailed  information  on  the  responses  to  this  question  can  be 
found in the table below. 

An  overview  to  the  general  framework  of  the  security  regulation,  conformity  assessment  and 

50 
certification can be found in the General Annexes, Figures 6 to 9. 
51 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM    
52 
public consultation on an industrial policy for the security industry. 

See the SECERCA study, chapter "11.4)": 

For more detailed information on the results of the public consultation see annex 2 results of the 

EN 

22 

   EN 

 
                                                 
to 

Responses 
lack  of  harmonised 
certification/conformity assessment procedures for security technologies affects the market 
fragmentation?" 

the  question:  "Do  you  agree 

that 

the 

Respondent profile 

Do not 
agree at 
all 

Do not 
agree 

Agree 

A business association 
A national administration 
An academic institution or think tank 
An individual 
Large enterprise (more than 250 
employees) 
Medium enterprise (between 50 and 249 
employees, turnover less than €50 million) 
Micro or small enterprise (fewer than 49 
employees, turnover less than €10 million) 
Non governmental organisation 
Other 
Regional or local administration 
Grand Total 

2 

1 

4 
3 
1 

2 

2 

1 

1 
1 

Agree 
very 
much 
6 
1 
2 
1 
14 

3 

4 

2 

Do not 
know 

3 

1 

3 

1 
8 

0 

3 

15 

33 

(3) 

Delays in certification procedures: the slow speed of the certification process can 
mean that technologies are already outdated before they receive approval 53.  

EU illustrative example: 

Illustration: X-Ray Scanners 

A  French  company,  which  is  specialised  in  neutron  generators  and  analysers,  developed  a 
detector that was complementary to conventional X-ray tomography for detecting explosives 
in  baggage.  However,  in  France  the  transposition  into  the  public  health  code  of  Euratom 
Directive 96/29 greatly widened its scope, going beyond the maximum activation threshold 
of  the  Directive.  In  practice  it  prohibits  any  "activation"  of  consumer  goods  or  food 
products, whatever the intensity. Because of this, the newly developed technology could not 
be used or tested in France, because all hold or cabin baggage may contain consumer goods 
or food products. 

The absence of an EU wide certification system for security technologies has the following 
consequences on the EU security industry sector. 

Consequences of the current situation on certification procedures in the EU:54 

Market conditions 

Producers 

Procurers/ users 

See the SECERCA study, "chapter 3 Overview: current situation, key themes and issues, main 

53 
findings and conclusions": 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   
54 
findings and conclusions": 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   

See the SECERCA study, "chapter 3 Overview: current situation, key themes and issues, main 

EN 

23 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
lack 

A 
(cid:31) 
transparency 
product performance 

of 
on 

(cid:31)     Costs  of  complying  with  multiple 
national procedures; 

(cid:31)     Lack 
transparency 

of 

(cid:31) 
fragmentation 

Market 

(cid:31)    Delay in ‘time to market’ of products; 

(cid:31)     Adaptation  costs 
assessment 
conformity 
procedures and standards; 

to  meet  national 
certification 
and 

(cid:31)     Slow  development  and  diffusion  of  new 
security technologies and solutions. 

(cid:31)    
choice 
suppliers 

Limited 
of 

3.2.2. 

 The gap between research and market 

For  the  EU  security  industry  it  is  very  often  difficult  to  close  the  gap  from  research  to 
market. In other words, when doing R&D on new technologies, it is often very difficult for 
industry to predict whether there will be in the end a market uptake, or to get some sort of 
guarantee  that  there  will  be  a  market.  While  this  is  a  widely  spread  problem  across  many 
industrial  sectors,  it  is  an  especially  pronounced  issue  for  the  security  industry.  This  is  in 
particular due to the fact that the security market is very often an institutional market.55 And 
this institutional market is mostly driven by catastrophic events/crises, as well as regulatory 
frameworks that set out security requirements. 

The problem is aggravated by the fact that those that set the security requirements are most 
often not the same entities that provide R&D funding and which are again different from the 
procurement agencies56.  

Supply side: 

For the supply side this often means that some of its R&D investment is simply wasted, as 
there is no subsequent market uptake. Given that it is mostly an institutional market, it is not 
really possible to divert this investment into other market segments.  

It also means that companies often simply do not explore new, potentially promising R&D 
concepts, or are not bringing R&D concepts that are promising for the public sector quicker 
to the market.57  

EU illustrative example: 

The  problem  of  appropriate  R&D  funding  was  described  by  stakeholders  in  the  following 
way:  

See: the ESRIF report WG 9 page 195: 

55 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/FILES/ESRIF_FINAL_REPORT_EN.PDF 
56 
the field of Security": HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   
57 
SECERCA study: HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   

See  Chapter  5  of  the  "Study  on  Pre-commercial  Procurement  in  the  field  of  Security":  See  the 

For an overview of these differences, see chapter 2.1 of the "Study on Pre-commercial Procurement in 

EN 

24 

   EN 

 
                                                 
"This is a classic question concerning technology push and market pull. There is always a 
gulf  between  the  manufacturers,  researchers  and  the  market.  Researchers  often  have 
difficulties to identify the market needs, as the market needs tend to be evolutionary rather 
than revolutionary which is always more interesting to a researcher. The entities that fund 
research are also often composed of technical people that share the same views, they hence 
tend  to  fund  programs  which  are  more  aligned  with  technology  push  rather  than  market 
pull.  This  results  in  very  little  take  up  of  the  new  technology  and  very  long  development 
times.  Companies  will  only  invest  if  they  can  address  an  available  market  rather  than  in 
blue sky research. It is therefore essential that the market is defined properly to overcome 
the lack of interest from the demand side to invest into R&D." 

Demand side: 

The  consequence  for  the  demand  side  is  that  it  is  often  faced  with  a  supply-driven  R&D 
procurement, rather than a demand-driven R&D, given that industry wants to have a return 
on  its  R&D  investment,  which  the  demand  cannot  guarantee.  However,  this  means  that 
sometimes  products  are  procured  which  are  either  not  entirely  fitted  for  the  destined 
purpose,  or  they  have  a  level  of  technology  sophistication  which  is  not  required  for  the 
destined  purpose  and  leads  to  a  more  expensive  procurement.58  Furthermore,  in  case  that 
promising R&D concepts are not brought to the market or only brought to the market at a 
later stage, this means that technologies that could improve the security of the citizen are not 
available for public procurers. Eventually, similarly to the private sector, this means that a 
notable amount of public R&D investment is not used in the most efficient way.59 

A  series  of  initial  initiatives,  aimed  at  closing  the  gap  between  research  and  market,  have 
already  been  launched  by  the  Commission  through  the  Security  Theme  of  the  7th  R&D 
Framework  Programme,  notably  through  the  involvement  of  end-users  in  so  called 
demonstration projects and through Pre Operational Validation activities60. 

Noteworthy  is  also  Directive  2009/81  on  the  procurement  in  the  fields  of  defence  and 
security, which expressly provides that the contracting authority/entity may buy the product 
developed  within  an  R&D  contract  without  having  to  organise  a  separate  procurement 
procedure if certain conditions are met. 

• 

US illustrative examples 

The US has clearly recognised the need to fill the gap between research and market in the 
security area. To that effect, the US has created two instruments: 

See PCP study (chapter 4) and the SECERCA study ("chapter 3 Overview: current situation, key 

See PCP study (chapter 4) and the SECERCA study ("chapter 3 Overview: current situation, key 

58 
themes and issues, main findings and conclusions"): 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM     
59 
themes and issues, main findings and conclusions"): 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM    
60 
Demonstration  Projects  are  large  scale  research  projects  aimed  at  the  integration,  validation  and 
demonstration  of  new  security  systems  of  systems.  Pre  Operational  Validation  involves  directly  –  and 
supporting financially - end-user agencies (typically national or European authorities). This would shorten time 
to  market  and  encourage  market  acceptance  of  new  technologies  when  seen  as  part  of  a  coordinated  policy 
framework,  including:  standardisation,  certification  and  regulation  of  innovative  goods  and  services  (and 
eventually facilitating coordination of procurement policies). The basic idea of a POV scheme is to support the 
demand side of research, rather than the supply side in their direct quest for new security solutions. 

EN 

25 

   EN 

 
                                                 
• 

• 

The  Small  Business  Innovation  Research  (SBIR)  Program  of  the  Department  of 
Homeland  Security  (DHS),  which 
increasing  private  sector 
commercialization  of  innovations  and  at  promoting  the  participation  of  SME's  in 
homeland security research. The targeted areas are: Borders and Maritime Security, 
Explosives,  Human 
Cyber 
Chemical/Biological  Defence, 
Factors/Behavioural  Sciences  and 
Infrastructure  Protection  and  Disaster 
Management61.  

is  aimed  at 

Security, 

The  US  Safety  Act  provides  for  legal  liability  limitations  of  anti-terrorism 
technologies.  The  goal  of  the  SAFETY  Act  is  to  encourage  the  development  and 
deployment  of  new  and  innovative  anti-terrorism  products  and  services  by 
providing  liability  protections.  The  legal  text  states  "The  purpose  of  the  Act  is  to 
ensure that the threat of liability does not deter potential manufacturers or sellers of 
antiterrorism  technologies  from  developing,  deploying,  and  commercializing 
technologies that could save lives."62 In other words, this instrument by promoting 
innovative technologies is aimed at closing the gap between research and market.63 

This  disadvantageous  difference  between  the  EU  and  the  US  was  also  underlined  by  the 
large majority of the industry participants to the public consultation, who stated that: 

"The industrial base across the EU is however fragile in the sense that it is currently losing 
out  to  industries  in  countries  such  as  the  United  States  in  a  fiercely  competitive  global 
security market; in significant part owing to the support industries outside receive from their 
host  Governments.  The  industrial  policy  framework  for  helping  companies  in  the  EU  to 
compete in the security market is currently insufficient. Subsidies and related initiatives such 
as the US Safety Act mean that the security industry across the EU is losing its competitive 
edge in the global market."64 

truer 

A specific issue with regard to closing the gap between research and market relates to civil-
military synergies. The possible benefits for the security sector through the exploitation of 
synergies between civil and defence technologies remains to this date largely untapped. This 
is 
(e.g.  electronics, 
telecommunications, surveillance, intelligence) developed by the defence sector could also 
be  of  relevance  for  internal  security  and  vice  versa.65  In  many  cases  civilian  and  military 
technologies share a common base which is then adapted to their specific needs. The same 
basic helicopter can for instance be modified for civilian or military utilisation.66 

than  ever  before,  where  certain 

technologies 

today 

61 
62 

See: 

See: http://www.dhs.gov/files/grants/gc_1247254058883.shtm 
See:  Federal  Register  /  Vol.  71,  No.  110  /  Thursday,  June  8,  2006  /  Rules  and  Regulations,  page 
33148. 
For  additional  details  on  the  US  safety  act  see:  SECERCA  study  chapter  9.5.  Anti-terrorism 

63 
technologies: the US SAFETY Act.  
64 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/FILES/DOC/PUBLIC_CONSULTATION/RESULTS_OF_T
HE_PUBLIC_CONSULTATION_ON_AN_INDUSTRIAL_POLICY_FOR_THE_SECURITY_INDUSTRY_EN.PDF  
65 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   and the study "The 
Industrial Implications in Europe of the blurring of dividing Lines between Security and Defence" 
HTTP://EC.EUROPA.EU/ENTERPRISE/SECTORS/DEFENCE/FILES/NEW_DEFSEC_FINAL_REPORT_EN.PDF. 
66 
An example for this is the transformation of the civilian helicopter EC135 by EADS - Eurocopter to a 
military  helicopter  the  EC635.  The  EC135  is  widely  used  amongst  police  and  ambulance  services  and  for 

See the study on CIV – MIL synergies: 

EN 

26 

   EN 

 
                                                 
At  the  moment  such  synergies  are  partially  taking  place  at  the  level  of  R&D  cooperation. 
However,  such  synergies  are  currently  neither  sought  more  upstream  at  the  level  of 
capability development, nor more downstream at the level of standardisation. Such upstream 
synergies could help civil security users in better defining their research requirements with a 
view to ensure that the subsequent procurement is based on clearly defined needs. And such 
downstream synergies could as well help in reducing the gap between research and market, 
as the potential market would be bigger if "hybrid" standards were to exist, thus encouraging 
industry to explore promising R&D concepts.  

Underlying drivers of the gap between research and market 

The underlying driver of the gap between research and market is largely due to the lack of 
information  about  security  technologies  and  capabilities  from  the  side  of  the  public 
authorities. This can be contrasted with the defence area, where public authorities are well 
accustomed  in  defining  their  future  technology  requirements  and  pulling  the  development 
through from research to the actual purchase67. This culture is, however, still missing in the 
area of civil security, not the least because in the civil security purchasing is normally more 
short term than based on a long term planning like in the defence domain68. 

Another driver is the fact that the security end-user is highly diversified between central and 
local  governments,  police  forces  and  border  guards,  etc  etc  up  to  private  end-users  like 
commercial  security  service  companies  and  infrastructure  operators.  In  contrast  in  the 
defence domain there is generally only one customer, the Ministry of Defence69. 

3.2.3. 

 The uncertainty of societal acceptance for security technologies 

Another  problem  is  the  uncertainty  associated  to  the  societal  acceptance  of  security 
technologies. 

The  societal  acceptance  of  products  and  technologies  is  a  general  problem  across  many 
different industrial sectors. A good example for one of the liveliest debates of the last years 
was for instance the debate about the commercialisation of genetically modified food. There 
are however a number of specificities that distinguish security technologies from other areas. 

The  main  reason  for  the  specificity  of  the  security  market  is  that  security  technologies, 
devices and measures implemented often concern fundamental rights (e.g. privacy, freedom, 

executive transport, the EC635 is marketed for troop transport, medical evacuation, cargo transport and armed 
combat support missions. The EC135 was adapted for military use through a reinforcement of the vital parts 
with  bullet  proof  materials,  two  side-mounted  Multi-Purpose  Pylons  with  aerodynamic  fairings  for  weapons 
systems, military grade communication and navigation systems. Other examples for civ mil synergies include: 
the internet (derived from the military DARPANET), radar technology (invented by the RAF in World War 2), 
digital photography (developed for satellite surveillance), nuclear research etc.  
67 
68 
Defence" 
HTTP://EC.EUROPA.EU/ENTERPRISE/SECTORS/DEFENCE/FILES/NEW_DEFSEC_FINAL_REPORT_EN.PDF 
69 
between Security and Defence" 
HTTP://EC.EUROPA.EU/ENTERPRISE/SECTORS/DEFENCE/FILES/NEW_DEFSEC_FINAL_REPORT_EN.PDF 

See "Study on the Competitiveness of the EU Security Industry", pages 39 and 64. 
See: "The Industrial Implications in Europe of the blurring of dividing Lines between Security and 

See Chapter 3 of the study "The Industrial Implications in Europe of the blurring of dividing Lines 

EN 

27 

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etc.)70. Any possible endangerment of these fundamental rights immediately raises concern 
among the population and often suscitate a very visible and concrete reaction. 

A second aspect is that in, most cases, when security technologies, devices and measures are 
implemented, citizens do not have the choice to avoid them. For example, the only way to 
avoid security measures in airports would be not to travel by plane. 

Another  aspect  is  that  security  technologies  are  in  many  cases  highly  visible.  Security 
cameras,  access  gates  or  security  scanners  are  becoming  more  and  more  part  of  our  daily 
environment.  Everyone  who  goes  to  an  airport  is  directly  confronted  to  a  detailed 
examination of their person and belongings. Passing through an airport checkpoint is also a 
very  concrete  experience  and  not  something  relatively  abstract  such  as  for  instance  the 
genetic code of our food. Security technologies are therefore often perceived as an intrusion 
of our personal sphere71. 

Responses to the question: "Do you agree with the problem definition, that security products 
need to be privacy compliant from the development to the production? 

Respondent profile 

A business association 
A national administration 
An academic institution or think tank 
An individual 
Large enterprise (more than 250 
employees) 
Medium enterprise (between 50 and 249 
employees, turnover less than €50 million) 
Micro or small enterprise (fewer than 49 
employees, turnover less than €10 million) 
Non governmental organisation 
Other 
Regional or local administration 
Grand Total 

Supply side: 

Do not 
agree at 
all 

1  

1 

1 

1 

1 
1 

6 

Do not 
agree 

Agree 

1 

1 

2 

1 

4 
1 

6 

2 

2 

5 

15 

Agree 
very 
much 
4 
2 
2 
1 
8 

1 

3 

3 
2 
1 
27 

Do not 
know 

3 
1 

2 

6 

These  societal  aspects  have  a  very  tangible  effect  for  a  company  that  wants  to  invest  in 
security  technologies.  The  security  industry  has  to  be  sure  that  its  products  will  be 
compatible  with  the  general  opinion  of  the  public.  The  commercialisation  of  their  new 
technologies  would  otherwise  be  impossible.  The  financial  and  human  efforts  that  go  into 
the development and production of a security product can therefore be easily wasted. 

This  uncertainty  consequently  reduces  the  willingness  of  the  EU  industry  to  invest  in  the 
development  of  new  technologies,  if  they  do  not  have  an  assurance  of  its  economical 
viability. The lack of a proper technological implementation of societal and ethical aspects 
in the drafting of technological requirements thus ultimately weakens the competitiveness of 

EU 

70 
rights: 
of 
HTTP://WWW.EUROPARL.EUROPA.EU/CHARTER/PDF/TEXT_EN.PDF.  See:  Article  6  Right  to  liberty  and 
security; Article 7 Respect for private and family life; Article 8 Protection of personal data. 
71 

See: HTTP://WWW.CPSI-FP7.EU/  

Fundamental 

Charta 

EN 

28 

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the EU security industry. At the same time third country competitors who do not have such 
constraints  can  however  develop  technologies  which  can  be  commercialised  in  their  own 
markets as well as in other non-EU countries72. 

EU illustrative example: 

Illustration: Biometric screening  

An  example  for  this  problem  is  the  use  of  biometrics  technologies  for  the  screening  of 
people at external borders. Further development of these technologies is currently hindered 
by the fact that no clear and transparent common criteria on privacy requirements have been 
established.  Manufacturers  of  security  technology  cannot  therefore  make  the  necessary 
investments  to  develop  privacy  enhancing  technologies  as  an  integrated  part  of  their 
technology solutions.  

Demand side:  

The  demand  side  is  also  confronted  with  an  unsatisfying  situation,  in  which  they  cannot 
acquire  the  technology  they  initially  intended  to  purchase.  Eventually  the  demand  side  is 
forced  to  purchase  a  less  controversial  product  which  does  however  not  entirely  fulfil  the 
technological requirements. 

EU illustrative example: 

Illustration: Terahertz scanners 

A  good  example  for  this  issue  is  the  well  known  case  of  Security  Scanners  (know  to  the 
wide  public  as  "Body  Scanners"),  based  on  mm-wave  technology  and  used  for  access 
control  and  border  checks  (such  as  airports).  Electromagnetic  radiation  in  the  mm-wave 
region  can  penetrate  fabrics  and  plastics,  so  it  can  be  used  in  surveillance  to  remotely 
uncover  concealed  weapons  on  a  person.  As  much  as  this  technology  is  efficient  as  much 
protest it generated from public and civil rights groups.73 

The European Parliament bought six of those scanners for €725,730 in 2005 as a precaution 
measure  after  the  2001  al  Qaeda  attacks  on  New  York  and  Washington.  In  October  2008, 
lawmakers  had  opposed  a  proposal  allowing  the  use  of  full  body  scanners  in  the  EU, 
unaware of the six unused devices lying around in the basement.74 In the end the EP never 
unpacked these scanners and auctioned them away in 2010. 

The  results  of  the  public  consultation  also  reflected  the  importance  accorded  by  all 
stakeholders,  be  they  public  or  private,  to  the  proper  implementation  of  privacy  concerns 
into technical requirements. On the question "Do you agree with the problem definition, that 

See the SECERCA study, chapter "9 Overview of US framework for conformity assessment and 

72 
certification of security products": 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   
73 
however not change the meaning of this example. 
74 
See: HTTP://EUOBSERVER.COM/9/29219  

Body  scanners  can  also  be  based  on  other  technologies  than  the  terahertz  based  systems,  this  does 

EN 

29 

   EN 

 
                                                 
security products need to be privacy compliant from the development to the production" (i.e. 
the concept of "privacy by design")75 over 70% of the participants stated their agreement. 

Stakeholder contribution on this issue, taken from the Public Consultation 

Body  scanners:  some  EU  Member  States  do  not  allow  the  use  of  certain  types  of  body 
scanners  (x-ray  backscatter).  Although  these  systems  comply  with  all  standards,  including 
Euratom, they are excluded. This blocks the EU internal market for security scanners and 
the development of a one-stop-security system. 

Underlying drivers of the ethical concerns 

The different ethical sensitivities among Member States 

The  approaches  on  the  ethical  issues  related  to  security  vary  considerably  among  the 
Member  States.  A  measure  that  is  perceived  by  one  Member  States  as  completely 
uncontroversial  could  be  unthinkable  in  another.  A  good  example  for  this  are  for  instance 
the  different  regulations  of  identity  cards  across  the  EU.  While  in  some  countries  like  the 
UK citizens are not obliged to have an ID card, in others countries like Germany, France and 
Portugal ID cards are not only obligatory, they also include a fingerprint of the card holder. 
The diverging regulations are often the results of lively debates among the citizens.  

These  varying  perceptions  of  security  have  also  been  confirmed  by  a  recent 
EUROBAROMETER report on the perception of internal security by the European citizens. 
A  table,  taken  from  this  report,  summarising  the  different  priorities  for  EU  citizens  on 
internal security aspects can be found under Annex 5. 

Two  main  questions  arise  out  of  this  circumstance:  which  ethical  standards  should  apply? 
and how should those ethical concerns be implemented into technical requirements? 

While a certain number of general rules exist, such as for instance articles six to eight of the 
"Charter of Fundamental Rights of the European Union" (6 "Right to liberty and security"76, 
7 "Respect for private and family life"77 and 8 "Protection of personal data"78), the technical 
translation  of  ethical  concerns  into  legally  binding  technical  requirements  still  remains 
largely unclear79. 

This  already  complex  and  sensitive  situation  is  further  complicated  through  the  lack  of  a 
common  EU  wide  approach  on  the  technological  requirements  for  privacy  compliance  of 

75 
The principle of prrivcay by design implies that when a product is to be designed, it will be built in 
such  a  way  that  it  will  include  the  technical  and  organisational  requirements  to  ensure  the  protection  of  the 
fundamental  right  to  privacy  and  data  protection  of  individuals.  Privacy  by  default  implies  that  a  product  is 
built in such a manner that privacy intrusive features of a certain product or service are initially limited to what 
is  necessary  for  the  simple  use  of  it.  For  instance  the  kind  and  amount  of  data  processed  are  limited  to  the 
minimum  necessary  for  a  specific  purpose; the  storage of information  processed  is  retained  to  the  minimum 
necessary, there are mechanisms that restrict access to information processed to only authorised persons and do 
not allow for indefinite disclosure.  
76 
77 
78 
79 
the EU's courts will strike down EU legislation which contravenes it. 

"Everyone has the right to liberty and security of person." 
"Everyone has the right to respect for his or her private and family life, home and communications." 
"Everyone has the right to the protection of personal data concerning him or her" 
Under the Charter, the European Union (EU) must act and legislate consistently with the Charter and 

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security technologies. The approaches to security of the Member States vary considerably, 
some  countries  face  fierce  reactions  to  any  possible  intrusions  to  the  privacy  of  citizens, 
while others can operate more freely, notably in the area of surveillance. 

This  issue  has  also  been  addressed  in  the  recent  Commission  Communication  "A 
comprehensive  approach  on  personal  data  protection  in  the  European  Union"80  (i.e.  the 
possible  creation  of  EU  certification  schemes  (e.g.  ‘privacy  seals’)  for  'privacy-
compliant' processes, technologies, products and services)81

. 

Another  aspect,  connected  to  the  societal  dimension,  which  influences  the  structure  of  the 
EU  security  market,  are  the  financial  constraints  related  to  the  uncertain  privacy 
requirements. A company will be less willing to invest in a technology or product if they do 
not  have  the  assurance  that  they  will  actually  be  able  to  commercialise  it.  Moreover,  the 
imposition  of  too  cumbersome  ethical  requirements  can  also  discourage  companies  from 
investing in the development of new technologies, should these appear to be economically 
unviable. An example for this are the already mentioned "Body Scanners". 

Civil-military synergies 

The possible benefit of an enhanced Civ-Mil cooperation for the civilian security sector is a 
highly  sensitive  topic.  Civil  rights  movements  have  often  stated  their  fear  of  a 
"militarisation"  of  the  civilian  sector.  Most  administrations  have  therefore  refrained  from 
launching  effective  initiatives  to  promulgate  the  integration  of  military  technologies  into 
security related applications. 

The  potential  benefits  of  synergies  have,  however,  been  acknowledged  on  numerous 
occasions by the European Council through a number of declarations and conclusions.82 

4. 

THE CURRENT SITUATION 

4.1.  Market fragmentation 

The  current  situation  is  well  exemplified  with  regard  to  certification/conformity 
assessment  procedures.  Member  States  have  their  own  national  certification  systems  in 
place  with  no  mutual  recognition  of  certifications  taking  place.  In  addition,  the  current 
situation  can  be  described  as  quite  uneven  in  that  some  Member  States  have  for  the  same 
products certification procedures in place, whilst other Member States have no procedures in 
place.  This  uneven  situation  combined  with  a  lack  of  mutual  recognition  would  in  all 
likelihood continue. 

Another  good  example  are  standards.  The  Commission  currently  mandates  on  an  ad-hoc 
basis  the  European  Standardisation  Organisations.  Whilst  not  many  European  standards  in 
the area of security exist, the current situation can, nevertheless, be described as a patchwork 

See: HTTP://EC.EUROPA.EU/JUSTICE/NEWS/CONSULTING_PUBLIC/0006/COM_2010_609_EN.PDF  
Examples for this privacy compliant processes are: "the right to be forgotten", "the principle of data 

80 
81 
minimisation", "privacy by design", etc. 
82 
HTTP://WWW.CONSILIUM.EUROPA.EU/UEDOCS/CMS_DATA/DOCS/PRESSDATA/EN/ESDP/104676.PDF  

See for example European Council Declaration of 11 December 2008 on "Strengthening capabilities" 

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of standards rather than standards being developed with an overall design in mind for what 
the standardisation landscape should look like.83  

The  Commission  submitted,  in  2011,  a  so-called  programming  mandate  (M/487)  to  the 
European Standardisation Organisations which aims at providing such identification, as well 
as providing a gap analysis. However, in itself if this programming mandate is not followed-
up  through  specific  standardisation  mandates  based  on  a  clear  prioritisation  developed 
together with stakeholders, the current patchwork situation would continue to exist. 

The central EU wide effort to address the issue of security on the level of security research is 
the  FP7  security  research  theme.84  A  specificity  of  this  theme  is  its  end  user  and  market 
oriented  nature,  bringing  together  representatives  from  national  authorities,  industry, 
research and end users. A number of these projects are thus also focussed directly on issues 
relevant  to  the  competitiveness  of  the  EU  security  industry  such  as  standardisation,  the 
economical aspects of security and interoperability.85 

4.2. 

Gap between research and market 

At the moment no pre-commercial procurement (PCP) is taking place at EU level (i.e. via 
FP7) in the area of security. Pre-commercial procurement is understood here as an approach 
to  procure  R&D  services,  whereby  the  Intellectual  Property  Rights  (IPR)  do  not  belong 
(exclusively)  to  the  contracting  authority86.  Through  such  an  approach  the  end-user  will 
define its requirements at an early stage, thus allowing industry to focus R&D efforts on the 
technical  specifications  required  by  that  end-user.  At  Member  State  level  some  very  few 
Member States have been experimenting with PCP schemes. This is for example the case in 
the  Netherlands.  Again,  we  can  speak  of  an  uneven  situation  in  the  Member  States  which 
would continue under this situation. 

It should be noted, that the Commission has recently published a proposal for Horizon 2020 
which contains a specific PCP funding scheme. However, having such a scheme and making 
use of such a scheme are two pair of shoes. Given that so far few Member States have used 
PCP in the area of security, without a forceful promotion of this scheme by the Commission, 
it is unlikely that this scheme would be used for security under Horizon 202087. 

So  far  neither  the  EU,  nor  Member  State  introduced  legislation  on  third  party  liability 
limitation  in  the  area  of  security.  The  Commission  also  has  so  far  not  taken  any  concrete 

EU 

500 

such 

wide 

other 

some 

sectors 

as  machinery 

83 
The total list of existing EU wide security standards encompasses currently only some 66 standards. 
An initial list of these standards can be found under Annex 13 "Initial list of EU wide standards for security". 
exist. 
standards 
In 
(HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/EUROPEAN-STANDARDS/DOCUMENTS/HARMONISED-
STANDARDS-LEGISLATION/LIST-REFERENCES/MACHINERY/INDEX_EN.HTM) 
84 
Created in 2007, the FP7 security research theme is a mission oriented research theme that addresses 
all areas of security (security of the citizens, intelligent border surveillance, critical infrastructure protection, 
crisis management, security and society etc.). With a budget of EUR 1.4 billion the security theme effectively 
represents over 50% of all the funding spent in the EU on security research. To this date, committed over EUR 
800 million, spread over 203 projects with more than 1500 participants from 43 countries. 
85 
A detailed overview of these projects can be found here: 
HTTP://CORDIS.EUROPA.EU/FP7/SECURITY/PROJECTS_EN.HTML  
86 
87 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   

See COM(2007) 799 final. 
See the PCP study. 

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action with regard to third party liability limitation. Potentially, this could mean that some 
technologies may not be brought onto the market, as companies might consider the liability 
risks linked to these new technologies to be too high. 

Civil-military  synergies  are  currently  being  sought  with  the  European  Defence  Agency 
through  the  so  called  European  Framework  Cooperation.  Under  this  cooperation  that  has 
been asked for by the Council, there is an on-going coordination between the FP7 Security 
Theme  and  EDA's  defence  research  activities.  The  aim  is  to  synchronize  this  research  in 
such  a  way  as  to  avoid  duplications  and  to  profit  from  possible  synergies.  Without  any 
additional  initiative  this  cooperation  would  continue.  However,  this  would  mean  that 
synergetic effects would be limited to the research domain.88 

4.3. 

Integration of the societal dimension into industrial policy 

It should be underlined that there exists no EU security industrial policy at the moment. This 
does however not mean that the societal dimension is not addressed at EU level. Currently 
activities are limited to R&D, where via its FP7 Security Theme the EU finances research 
projects  in  the  area  of  security  that  look  into  how  to  better  integrate  ethical  aspects  into 
technology, e.g. through research into privacy by design technologies. It is afterwards left to 
industry  whether  they  pursue  these  technologies  and  actually  integrate  them  into  products 
hitting the market. 

In some areas it is likely that industry will indeed integrate ethical concerns, notably privacy 
issues, into its products. However, without any measures taken at EU level, it is unlikely that 
a more comprehensive approach will be taken by industry on this. It will remain a case by 
case consideration made by industry.  

5. 

EU RIGHT TO ACT 

Problem 1: The fragmentation of the EU security markets 

Article 26 (1) of the Treaty on the Functioning of the European Union (TFEU) foresees that 
the Union shall adopt measures with the aim of establishing or ensuring the functioning of 
the internal market".  

As the participants to the public consultation unambiguously stated, EU action is necessary 
to overcome the fragmentation of the security markets. 

Problem 2: The gap between research and market 

Article 173 (1) of the TFEU states that the Union and the Member States shall ensure that 
the  conditions  necessary  for  the  competitiveness  of  the  Union's  industry  exist.  Actions  to 
that effect shall be aimed inter alia at "fostering better exploitation of the industrial potential 
of policies of innovation, research and technological development". 

See: HTTP://WWW.EDA.EUROPA.EU/NEWS/11-09-

88 
16/EDA_AND_THE_COMMISSION_SIGNED_A_EUROPEAN_FRAMEWORK_COOPERATION_COORDINATION_L
ETTER_YESTERDAY  

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The  participants  of  the  public  consultation  were  adamant  on  the  need  to  improve  the 
competitiveness of the EU security industry. 

Problem 3: The uncertainty of societal acceptance for security technologies 

Article 67 of the TFEU states that "The Union shall constitute an area of freedom, security 
and justice with respect for fundamental rights and the different legal systems and traditions 
of the Member States".  

More  than  70%  of  the  participants  of  the  public  consultation  stated  that  the  societal 
dimension  and  more  specifically  the  privacy  compliance  of  security  technologies  was 
essential. 

Security as a national prerogative 

Whilst the Treaty of the European Union states that the essential State functions, including 
ensuring  the  territorial  integrity  of  the  State,  maintaining  law  and  order  and  safeguarding 
national security remains the sole responsibility of each Member State (Article 4, paragraph 
2),  there  is  an  evident  link  between  national  security  and  security  of  the  Union,  which  is 
further  spelled  out  in  the  Treaty  of  the  European  Union.  Thus,  the  Union  "shall  offer  its 
citizens an area of freedom, security and justice" (Article 3, paragraph 2). 

The  EU  right  to  act  was  also  unmistakeably  supported  by  the  participants  of  the  public 
consultation. Over 86% of the participants agreed that action by the EU would be necessary 
to reduce the market fragmentation and to reinforce the industrial base in the security area. 
Not a single respondent answered with "no". 

The issue of a security industrial policy was also presented to and discussed with on several 
occasions  to  the  Programme  Committee  of  the  FP7  Security  Theme.  The  FP7  Programme 
Committee is constituted by representatives from Ministries (Interior, Research, Economics 
and Defence) from the EU 27 Member States and 14 associated countries.89 A large number 
of Member State expressed their support for EU action during these meetings, no Member 
State objected on the presented policy measures. 

A  further  aspect  that  should  be  taken  into  account  when  assessing  the  EU  Right  to  act  is 
related  to  the  financial  and  technical  capabilities  in  the  Member  States  on  security 
technologies.  Only  7  (France,  Germany,  The  UK,  the  Netherlands,  Sweden,  Austria  and 
Finland)  of  the  EU  27  Member  States  currently  have  a  national  security  research 
programme.  The  FP7  security  research  theme  represents  more  than  50%  of  the  whole  EU 
wide  funding  for  security  research.  Only  a  very  limited  number  of  Member  States  have 
national  capabilities  to  address  issues  related  to  security  technologies,  the  large  majority 
depend on EU initiatives. 

It is very unlikely that the Member States will overcome those challenges on their own. As 
the  participants  to  the  public  consultation  and  to  the  Workshops  (among  which 
representatives  from  Austria,  Belgium,  France,  Germany,  the  Netherlands,  and  Spain) 
unambiguously stated, EU action is necessary. 

89 
of Macedonia, Serbia, Albania Montenegro, Bosnia & Herzegovina, Faroe Islands, Republic of Moldova.  

Switzerland, Israel, Norway, Iceland, Liechtenstein, Turkey, Croatia, the Former Yugoslav Republic 

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6. 

OBJECTIVES  

The general policy objective is to enhance the competitiveness of the EU security industry.  

Increased  competitiveness  of  the  EU  companies  on  a  worldwide  level,  but  also  stronger 
competition  inside  the  EU  would  allow  the  mostly  public  end  users  to  purchase  more 
adequate  technologies  with  a  better  cost-benefit  ratio.  The  central  beneficiary  of  this 
evolution would be the European citizen, who would see his security enhanced. 

The importance of the European Union for security of its citizens has been clearly stated in 
article  three  of  the  "Treaty  on  European  Union"90as  well  as  article  six  of  the  Charter  of 
Fundamental Rights of the European Union91. 

The specific objectives are to reduce the fragmentation of the EU security markets, to reduce 
the  gap  between  research  and  market,  and  to  contribute  to  a  better  integration  of  societal 
aspects into security industrial policy. For each of these, operational objectives are reflected 
in the following table. 

General and specific objectives 

General objectives 

Specific 
objectives 

Enhance 
the 
competitiveness  of  the 
EU security industry 

Reduce 
the 
fragmentation  of 
the  EU  security 
markets 

Reduce 
the  gap 
between  research 
and market 

to  a 
integration 
societal 
into 

Contribute 
better 
of 
dimension 
industrial policy 

the 

Operational objectives 

• 

• 

• 

• 

• 

• 

• 

Improve  mutual 
security products 

recognition  of 

Speed up standardisation in the area 
of security 

Encourage 
Procurement  

Pre-Commercial 

Analyse  the  need  for  a  third  party 
liability regime 

Strengthen civil-military synergies 

Introduce  societal  aspects  at  the 
pre-commercial  development  level 
of products 

Introduce  societal  aspects  at  the 
production process level 

Article 3 TEU: "1. The Union’s aim is to promote peace, its values and the well-being of its peoples. 

90 
2. The Union shall offer its citizens an area of freedom, security […]", 
91 
Everyone has the right to liberty and security of person" 

Article 6 Charter of the Fundamental Rights of the European Union: "Right to liberty and security - 

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7. 

ENVISAGED POLICY INITIATIVES 

The  stakeholder  consultations  (public  consultations  as  well  as  workshops)  as  well  as  the 
studies launched by the Commission services identified a progressive step by step approach 
to  be  the  most  suited  and  feasible  approach  to  address  the  problems  of  the  EU  security 
industry. 

The  main  advantage  of  such  a  step  by  step  approach  would  lie  in  its  analytical  and 
progressive  nature,  i.e.  no  legislative  initiative  would  be  launched  by  the  Commission 
without  a  prior  consultation  of  all  the  relevant  stakeholders  (be  they  public  or  private),  a 
thorough  analysis  of  the  legal  framework  and  finally  a  dedicated  Impact  Assessment.  The 
approach  thus  ensures  that  no  legislative  initiative  could  be  initiated  that  could  have  a 
detrimental  effect  on  the  EU  citizens,  Member  States  or  industry  (large,  medium  or  small 
enterprises). 

Area 
Certification 

Initiative 
Step by step certification/conformity assessment 
procedures focused on certain priority areas or priority 
technologies where there is a clear EU added value. 

Standardisation  Step-by-step end-user driven standardisation based on a 
careful identification of existing, national, European and 
international standards, via Commission mandates to 
ESO's 

Stakeholder 
approval rate 
71.19%

76.27%

Pre 
Commercial 
Procurement 

A focused pre-commercial procurement scheme being 
built up via the possible future FP8 and/or CIPII funding. 

76.27%

This approach would focus on initiatives that could probably be agreed with the European 
Parliament  and  Member  States  in  the  short-term  and  would  identify  areas  where  action 
should be taken in the medium-term or where further study was needed for the long-term.  

7.1.  Market fragmentation 

Certification/conformity assessment procedures  

The  EU  would  introduce  certification/conformity  assessment  procedures  for  certain 
priority  technologies  or  areas.  Based  on  the  study  commissioned,  as  well  as  intensive 
stakeholder consultations, it is considered that in a first step the following two areas should 
be covered by an EU wide certification scheme: 

• 

• 

alarm systems ; and 

airport screening (detection) equipment. 

Both areas were chosen by the Commission services as they would: 

• 

directly  address  one  of  the  central  problems  of  the  security  markets: 
fragmentation due to the lack of harmonised standards and certification procedures 
for security technologies; 

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• 

• 

• 

• 

create substantial benefits and cost savings in each of the targeted segments; 

encourage the establishment of an EU brand for the concerned technologies, thus 
raising  the  profile  of  European  technologies  in  comparison  to  their  international 
competitors; 

be relatively unproblematic from a political and technical point of view, as they 
would build on a pre-existing legislative and technical basis  and given that a strong 
support  for  EU  action  on  those  segments  has  been  expressed  by  all  stakeholders; 
and 

should be uncontroversial on a societal level, as they would not affect any ethical 
or privacy related issues.  

A detailed explanation on these aspects can be found in the following passages as well as in 
the annexes 7 to 10. 

Alarm systems 

As  regards  alarm  systems92,  there  exist  already  some  European  standards,  and  in  addition 
there exists an industry-led certification mechanism called CertAlarm. CertAlarm is the only 
European  Accreditation  endorsed  certification  scheme  for  the  fire  and  security  industry. 
CertAlarm has been initiated by the main business association for alarm systems in the EU, 
EURALARM.  EURALARM  encompasses  national  associations  of  14  European  countries, 
with around 700 companies having a total turnover of approx. 3.5 billion Euro, i.e. approx. 
70 % of the total European market for alarm systems.  

However,  this  system  is  faced  with  the  problem  that  it  is  privately  run  and  authorities  of 
Member  States  have  no  obligation  to  accept  certificates  established  under  the  CertAlarm 
scheme.93 The potential for cost savings through the introduction of a harmonised EU wide 
certification scheme is therefore left untapped. 

Stakeholder contribution on this issue taken from the Pubic Consultation: 

"We would recommend to develop and push acceptance by Member States of pan-European 
certification  schemes  which  will  definitely  remove  intra-EU  barriers  to  trade.  The 
CertAlarm scheme could certainly constitute a basis for other similar certification schemes." 

A  detailed  overview  on  the  quantitative  analysis  of  benefits  of  a  harmonised  certification 
scheme can be found in the illustration below and in Annex 8. 

The  Commission  would  address  this  issue  by  announcing  the  drafting  of  a  legislative 
proposal  setting  up  an  EU-wide  conformity  assessment  scheme  for  alarm  systems.  Such  a 
legislative proposal would evidently be preceded by a dedicated Impact Assessment. 

Illustration: competitiveness effects for alarms 

The development of EU-wide harmonised standards and a common conformity assessment 

92 
93 

See Annex 7: Competitiveness proofing, for a detailed overview. 
See: HTTP://WWW.CERTALARM.ORG/CA/INDEX.PHP 

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procedure is expected to significantly reduce the certification costs for suppliers of intruder 
alarm  systems  where  they  serve  multiple  national  markets  in  the  EU.  Moreover,  it  should 
reduce  costs  incurred  in  developing  variants  of  products  that  are  adapted  to  comply  with 
differing standards and conformity assessment procedures at national level, which industry 
stakeholders  consider  often  have  limited  actual  impact  on  product  performance  for  final 
customers.  Removing  the  need  for  multiple  certifications  would  enable  suppliers  of  alarm 
systems to more rapidly access different parts of the EU market which, in turn, could benefit 
the  organisation  and  scale  of  production  activities.  Further,  by  reducing  delays  in  ‘time  to 
market’  caused  through  multiple  certification  requirements,  an  EU-wide  scheme  should 
reduce  the  risk  of  new  product  innovations  being  replicated  by  competitors.  Thus,  an  EU-
wide scheme should increase the potential return and reduce the level of risk associated to 
investments in research and technology development. 

Although a handful of major players dominate both the EU (and US) market, there remain 
many niche markets that are very attractive for SMEs, either directly or through the supply 
of specialized products and components to major manufacturers and integrators, and to the 
installation  service  market.  Conformity  assessment  and  certification  costs  represent  a 
proportionately  higher  share  of  total  costs  for  SMEs  and  consequently  a  greater  market 
access barrier. Accordingly, they are expected to benefit in particular from the cost savings 
resulting  from  EU-wide  harmonised  standards  and certification  procedures.  In addition, an 
EU  certification  scheme  should  serve  as  a  recognised  mark  of  product  performance  and 
quality  that  can  reduce  the  importance  of  ‘reputation  effects’  of  larger  players  and  local 
companies, thus facilitating SMEs to trade across borders within the EU and even in global 
markets. 

Overall, an EU-wide scheme is expected to increase market efficiency in the EU by raising 
the  level  of  competition  –  both  between  EU  companies  and  from  outside  the  EU  –  and 
stimulate improvements in industry performance levels (e.g. productivity). It is not expected, 
however,  that  the  reduction  in  costs  resulting  from  an  EU-wide  approach  would  have  a 
significant  impact  on  the  price  competitiveness  of  EU  alarm  products  in  international 
markets.  Nonetheless,  a  less  fragmented  EU  market  should  encourage  investment  in 
research,  technology  development  and  innovation,  which  would  have  an  impact  on 
‘dynamic’  competitiveness.  Further,  to  the  extent  that  it  obtains  higher  market  recognition 
than  existing  national  schemes,  an  EU-wide  certification  scheme  (providing  for  a 
corresponding  EU  security  ‘performance  mark’  or  ‘quality  label’)  should  contribute  to 
strengthening broader international market awareness and acceptance of EU products. 

Airport screening equipment 

As regards airport screening94 equipment there exists a whole body of EU legislation which 
sets  out  performance  requirements  for  such  equipment  (see  Regulation  EC  300/2008, 
Regulation EC 272/2009 and Regulation EU 185/2010). However, this legislation does not 
contain the underlying conformity assessment mechanism which would be required so that a 
screening  equipment  certified  in  one  Member  State  (according  to  EU  performance 
requirements) is mutually recognised in any other Member States. 

94 

Annex 7: Competitiveness proofing, for a detailed overview. 

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The Commission would announce the drafting of a legislative proposal that would set up an 
EU wide conformity assessment scheme, initially referring to the performance requirements 
already set out in EU legislation with regard to airport screening equipment. This legislation 
could  easily  be  extended  in  the  future  when  performance  requirements  will  have  been 
developed for related areas (e.g. port security). Such a legislative proposal would evidently 
be preceded by a dedicated Impact Assessment. 

It should be underlined that, given that the performance requirements already exist at the EU 
level,  through  EU  legislation  there  would  not  be  a  need  to  “harmonize”  national  security 
policies. 

This legislation could easily be extended in the future when performance requirements will 
have been developed for related areas (e.g. port security). 

Illustration: competitiveness effects for airport screening 

By  promoting  mutual  recognition  of  certification,  the  proposed  EU-wide  scheme  should 
remove  –  or,  in  so  far  as  Member  States  set  more  stringent  requirements,  reduce  –  the 
necessity  for  equipment  to  undergo  multiple/additional  national  conformity  assessment 
procedures.  Consequently  an  EU-wide  scheme  is  expected  to  reduce  costs  (direct  and 
indirect)  for  conformity  assessment  and  certification  for  suppliers  of  aviation  security 
screening equipment which, for example, the European Organisation for Security indicates 
can  be  as  much  as  €  2  million  of  a  large  scanning  machine  undergoing  certification 
throughout the EU. Furthermore, a common certification scheme should reduce the ‘time to 
market’  between  product  development  and  commercialisation,  which  would  be  beneficial 
both to industry and to customers looking to deploy new security technologies and solutions. 

Industry representatives also point to the benefits of a more unified and predictable market 
environment. The scheme should ensure that, once equipment is certified, it will be accepted 
throughout  the  EU  as  meeting  the  necessary  EU  performance  requirements.  Thus  the 
potential market within the EU can more readily be identified and conditions for competition 
will  be  more  transparent.  This  would  provide  inter  alia  for  a  reduction  in  the  uncertainty 
associated to investments in research and technology development (RTD), which is expected 
to be of particular benefit for the aviation security screening sector given the importance of 
technology development in underpinning competitiveness. Overall, by contributing to a less 
fragmented and more transparent market, the proposed  scheme would  raise overall market 
efficiency and industry performance levels. 

The  introduction  of  an  EU-wide  scheme  is  not  expected  to  significantly  alter  the  overall 
structure  of  the  aviation  security  screening  sector  in  which  the  major  players  already 
compete at a global scale. For smaller players, it is thought unlikely that the proposed EU-
wide  scheme  would  significantly  alter  their  capability  to  challenge  the  major  equipment 
suppliers  and  systems  integrators.  However,  in  so  far  as  EU  certification  serves  as  a 
recognised mark of product performance within the EU market, then it may facilitate SMEs 
to act as supplier to the major players in the sector. 

At  an  international  (global)  level,  in  addition  to  providing  an  indicator  of  product 
performance, a unified EU approach should facilitate international dialogue towards greater 
reciprocity (notably with the USA) in the recognition of certificates that would reduce costs 
associated  to  third-country  certification  and  enhance  international  market  access  for  EU 

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certified products. 

As  regards  standardisation,  the  Commission  would  instigate  an  end-user  driven 
standardisation  based  on  a  careful  identification  of  existing,  national,  European  and 
international  standards.  As  mentioned  above,  to  this  effect  the  Commission  already 
submitted a so called programming mandate to the European Standardisation Organisations 
(M/487)  which  aims  at  providing  such  identification,  as  well  as  providing  a  gap  analysis. 
Major gaps were identified in the following areas: 

– 

– 

– 

Chemical,  Biological,  Radiological,  Nuclear  and  ExplosivesCBRNE  –  minimum 
detection standards as well as sampling standards, including in the area of aviation 
security; 

Border  security  –  common  technical  and  interoperability  standards  for  automated 
border control systems, as well as standards for biometric identifiers; and 

Crisis  management/  Civil  protection  – 
communication 
interoperability,  as  well  as  interoperability  of  command  and  control,  including 
organisational interoperability, as well as mass notification of the population. 

standards 

for 

7.2. 

The gap between research and market 

The Commission services would build on the PCP scheme to be built up via Horizon 2020. 
This scheme also foresees the possibility of a top-down PCP scheme, i.e. where such a PCP 
scheme would be organised via appropriate EU agencies. The Commission would make full 
use  of  this  new  funding  scheme  with  regard  to  security  research.  Additionally,  the 
Commission would encourage the Member States to launch similar initiatives on a national 
level,  in  compliance  with  Directives  2004/18  for  non-sensitive  and  2009/81  for  security 
sensitive procurement. 

Concerning  third  party  liability  limitation  there  is  a  strong  request  from  industry  to 
introduce  something  similar  to  the  US  Safety  Act  in  Europe.  However,  there  are  clear 
limitations with regard to EU competence in this area, as well as to whether this would have 
a concrete effect on the competitiveness of the EU industry. All issues related to third party 
limited liability protection (legal, economic, etc.) would be further studied. 

Regarding  civil-military  synergies,  so  far  cooperation  focused  on  the  research  area. 
However, the more downstream elements of such synergies have largely remained untapped. 
The idea is that there are some areas where "hybrid standards" could be foreseen, covering 
the  civil  and  the  military  domain.  A  good  example  are  Unmanned  Areal  Vehicles  (e.g. 
relating  to  sense  and  avoid  systems  or  airworthiness  requirements)  and  reconfigurable  and 
cognitive radio (also known as Software Defined Radio). Technology in these areas is very 
similar if not the same in the civil and military domain. In these areas the Commission, in 
close cooperation with EDA, would issue standardisation mandates. 

7.3. 

The integration of the societal dimension 

Concerning the societal dimension, an effort would be made to introduce this dimension at 
the stage of the production process. This means that an economic operator wishing to have 

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his production process audited for being "privacy by design" fit, would have to fulfil a set of 
requirements  defined  through  an  appropriate  EU  standard  that  would  be  mandated  by  the 
Commission to the ESOs. Such a standard could be modelled on existing schemes, such as 
for  example  the  existing  standards  of  the  ISO  29100  family  developed  in  the  Privacy 
Standardization  ISO/IEC  JTC  1/SC  27/WG  5  «Privacy  &  Identity  Management 
Technologies». It would, however, remain voluntary for companies to apply such a standard. 
There would, nevertheless, be a strong peer pressure. 

Also  at  the  level  of  the  pre-commercial  development  of  products  the  societal  dimension 
would be introduced. This would be done by using the PCP scheme outlined above to also 
"test" the societal acceptance of new technologies. 

7.4. 

Overview of the envisaged policy initiatives 

This table gives a brief summary of policy initiatives envisaged by the Commission services 
as possible areas for EU action. 

Policy area 

Certification 

Standards 

Pre-commercial Procurement 

Third  Party  Limited  Liability 
Protection 

Civil – military synergies 

Action 

launch 

certification/conformity 
The  EU  would 
assessment  procedures  focused  on  certain  priority  areas 
or priority technologies where there is a clear EU added 
value.  Based  on  the  results  of  the  studies  and  the 
stakeholder  consultations  the  two  following  areas  were 
identified  to  be  the  most  promising:  airport  screening 
equipment and alarm systems. 

The  Commission  would  instigate  an  end-user  driven 
standardisation  based  on  a  careful  identification  of 
existing,  national,  European  and  international  standards, 
via  Commission  mandates  to  European  Standardisation 
Organisations. 

Making  full  use  of  the  pre-commercial  procurement 
scheme being built up via "Horizon 2020". PCP would be 
organised  in  a  top  down  approach,  via  agencies  such  as 
FRONTEX.  The  Commission  would 
furthermore 
encourage the Member States to launch similar initiatives 
on  their  national  level,  in  compliance  with  Directives 
2004/18  for  non-sensitive  and  2009/81  for  sensitive 
security procurement. 

The Commission would launch a thorough analysis on all 
issues  related  to  third  party  limited  liability  protection. 
(e.g. dedicated studies, public and targeted consultations 
of  all  relevant  stakeholders  in  the  EU).  All  possible 
options  of  liability  schemes  will  have  to  be  taken  into 
account  in  the  context  of  this  analysis  (e.g.  the  creation 
of a victim compensation fund, etc). 

the  synergies 
The  Commission  would  strengthen 
between  civilian  and  defence  technologies  through  a 
downstream coordination at the level of development of 

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Societal aspects 

standards.  

The  economic  operator  wishing  to  have  his  production 
process audited for being "privacy by design" fit, would 
have  to  fulfil  a  set  of  requirements  defined  through  an 
appropriate EU standard that would be mandated by the 
Commission  to  the  ESOs.  Such  a  standard  could  be 
modelled  on  existing  schemes,  such  as  for  example  the 
ISO  9000  quality  management  scheme,  but  applied  to 
management  of  privacy  issues  during  the  production 
process,  e.g.  the  ISO  29100  family  developed  in  the 
Privacy  Standardization  ISO/IEC  JTC  1/SC  27/WG  5 
«Privacy  &  Identity  Management  Technologies».95  It 
would,  however,  remain  voluntary  for  companies  to 
apply such a standard. 

PCP schemes would be used to "test" the societal impact 
of new technologies. 

8. 

THE EXPECTED BENEFITS OF THE ENVISAGED POLICY INITIATIVES 

The launch of a successive set of policy measures on certification, standardisation and pre-
commercial  procurement  is  expected  to  have  a  highly  positive  effect  on  the  EU  security 
industry. 

The step by step approach would ensure that the policy initiatives are based on a thorough 
and well founded analysis of the EU security markets. Thus enabling the Commission to 
identify  the  most  appropriate  and  efficient  policy  measures  needed  to  address  the  main 
currently  existing  obstacle  for  the  creation  of  a  true  internal  market  for  security:  the 
fragmentation of the national regulatory frameworks.  

8.1.  Market fragmentation 

The  central  envisaged  EU  action  would  be  the  development  of  adequate  EU  wide 
harmonised  standards  and  certification  procedures  for  alarm  systems  and  airport 
screening  equipment.  This  would  not  only  open  up  the  national  security  markets  and 
develop the competition among the EU security companies, it would also reduce the cost of 
commercialising security products and improve the choices for end-users.  

The expected positive consequences of harmonised EU wide certification procedures are: 

• 

• 

• 

• 

95 

reduction of costs associated to multiple testing; 

facilitated access to markets; 

reduction of the "time to market"; 

improved transparency of performance requirements and standards; 

See: HTTP://WWW.ISO.ORG/ISO/ISO_TECHNICAL_COMMITTEE?COMMID=45306  

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• 

• 

• 

enhanced competition among EU suppliers; 

reduction of costs for conformity assessment and certification (CAC) services and 
the development of security technologies; 

lower prices for security technologies 

Producers  of  security  technologies  should  benefit  from  the  introduction  of  EU  wide 
harmonised CAC procedures in the targeted sectors. The most evident being the reduction of 
costs  associated  to  the  multiple  testing  of  security  technologies  across  the  Member  States. 
The cost for CAC procedures of basic security technologies can amount to several hundred 
thousand Euros per Member State. Committing these costs just once, instead of multiplying 
them  by  27  for  each  of  the  Member  States,  can  enable  producers  to  save  several  million 
Euros in the development and commercialisation cost of new technologies.  

For the two targeted areas, the cost-benefit analysis shows that up to 29 million EUR yearly 
could be saved in certification costs. A detailed overview on the quantitative analysis can be 
found under Annex 8. 

Alarm systems: 

The  total  costs  for  certification  and  conformity  assessment  of  intruder  alarm  systems  is 
currently estimated to range between EUR 6.2 million and EUR 13.2 million per year. These 
costs  cannot  be  reduced  completely  through  a  harmonised  certification  scheme..  After  all, 
there is still need for a single certification and conformity assessment, and associated need 
for testing etc. It is nevertheless assumed that a single EU system reduces the cost associated 
to  differences  in  technical  rules  and  multiple  testing/certification  by  three-quarters  (75%). 
This would suggest a saving of EUR 4.7 million to EUR 9.9 million per year. 

Airport screening: 

A  harmonisation  of  the  certification  and  conformity  assessment  procedures  for  airport 
scanners would prevent all duplications at national level, which allows for considerable cost 
savings. The cost for certification and conformity assessment would thus amount to EUR 3 
million  (30  products  *  EUR  100  thousand).  This  implies  that  the  impact  of  the 
harmonisation  in  terms  of  reduction  of  costs  for  certification  and  conformity  assessment 
would amount to approximately EUR 19 million per year96. 

A  common  CAC  procedure  should  also  increase  the  transparency  of  the  certification 
process,  giving  producers  a  better  understanding  of  the  required  performance  standards.  A 
single  EU  wide  CAC  system  should  also  improve  the  openness  of  the  markets,  thus 
facilitating  the  market  access  for  the  producers  of  security  technologies.  The  particularly 
pronounced  problem  of  the  hurdles  to  market  entry  in  the  security  sector  should 
subsequently be reduced. 

This  facilitation  of  market  access  should  have  an  especially  notable  effect  on  SMEs.  As 
previously  stated  SMEs  have  a  more  limited  access  to  financial  resources  and  suffer  the 

96 
of certification. 

An assessment of the implied costs can be fund in the Annex 8: Background to quantitative analysis 

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43 

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most  from  the  burdens  imposed  by  multiple  CAC  procedures.  The  reduction  of  costs 
associated  with  moving  to  a  ‘one-stop’  system  with  mutual  recognition  of  certification 
would be greater (in relative terms) for SMEs. 

Harmonising  the  certification  procedures  for  airport  screening  systems  and  alarm  systems 
should  also  have  a  positive  effect  on  the  creation  of  a  clearer  European  identity  for  these 
technologies,  a  possible  "EU  brand".  This  "EU  brand"  should  contribute  to  enhancing  the 
global  competitiveness  of  the  EU  companies  with  regards  to  their  US  and  Chinese 
competitors. 

As  confirmed  by  the  stakeholder  consultations97,  a  single  CAC  procedure  would 
considerably reduce the workload associated to the administrative burdens for security 
companies and public administrations, thus freeing-up human and financial resources. 

8.2. 

Gap from research to market 

The launching of dedicated policy measures with regard to pre commercial procurement 
would  strongly  help  in  better  aligning  R&D  projects  with  security  requirements  and  end-
user needs, thus contributing in closing the gap between research and market.  

A  tentative  assumption  of  a  1%  increase  in  the  annual  growth  rate  due  to  R&D  support 
through  a  PCP  scheme  would  lead  to  extra  sales  of  2  billion  €  and  to  an  increase  in 
employment of up to 31000 (excluding the services sector). The employment figure is based 
on  the  world  employment  of  2  million  in  2009,  projected  assuming  a  constant 
sales/employment  ratio.  The  calculations  in  the  table  below  detail  the  possible  evolution 
from  2012  to  2020,  given  that  the  first  results  of  the  use  of  PCP/POV  schemes  in  EU 
security research cannot be expected earlier. It should be noted that these are conservative 
estimations based on the results of the US SBIR programme.  

An overview on the estimations can be found in the table below as well as under Annex 9. 

Possible impact of a PCP scheme on the European security industry 

2012 

Prevision on the 2020 
market value without the 
use of PCP schemes 

Prevision on the 2020 
market value with the use 
of PCP schemes 

PCP 
impact 

European security market 
value (billion €) 

European security industry 
production (billion €) 

European security industry 
employment (thousands) 

17 

22.7 

140 

growth  
(in %) 
3.5 

2.6 

2.6 

Projected value 
in 2020 

23 

28 

172 

growth  
(in %) 
4.5 

4.5 

4.5 

Projected value 
in 2020 

25 

33 

+ 2 

+ 5 

203 

+ 31 

As regards third party liability limitation, the Commission services would study in depth 
what  the  pros  and  cons,  as  well  as  political,  legal,  financial  and  technical  limitations, 
burdens and boundaries of possible future measures in this area would be, and how such a 
liability limitation would effectively help in closing the gap between research and market.  

97 

See: Annex 1: Summaries of the Workshops. 

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Finally,  regarding  civil-military  synergies,  the  downstream  coordination  should  have  a 
positive  effect  on  reducing  the  gap  between  research  and  market98.  The  establishment  of 
hybrid  standards  should  enable  industry  to  achieve  a  better  value  for  money  on  their 
investment in civ-mil R&D, given that it should allow them to address two different markets 
with  one  technology.  This  improved  cost  to  benefit  ratio  should  in  turn  create  a  better 
climate  for  R&D  funding  and  encourage  companies  to  augment  their  investments.  The 
estimated  sales  increases  for  security  technologies  exemplified  for  infrared  cameras, 
Command,  Control,  Communications,  Computers,  and  (military)  Intelligence  (C4I),  Radio 
Communication and UAV are in the vicinity of EUR 2.8 billion.99 The estimated increase 
in employment in the security industry is expected to be at approximately 17.000. 

A  detailed  overview  on  the  estimations  can  be  found  in  the  table  below  as  well  as  under 
Annex 10. 

The four following fields were analysed on their potential for civilian military synergies: 

• 

• 

• 

Infrared cameras 

C4I (Command, Control, Computers and Intelligence) 

Radio-communications 

Estimations on the possible benefits through the exploitation of civil military synergies  

Civil Military 
synergies 

Increase in sales 

Added employments 

Defence and 
Security 

Only Security 

Defence and 
Security 

Only 
Security 

Infrared cameras 

EUR 450 million 

EUR 440 million 

2.800 

2.750 

C4I 

EUR 300 million 

EUR 900 million 

1.875 

5.625 

Radio Communication  EUR 1.000 million 

EUR 1.500 
million 

-3.125 

9.375 

Total 

EUR 1.7 billion 

EUR 2.840 bilion 

1550 

17.750 

(It  should  be  noted  that  the  sales  for  defence  technologies  for  C4I  and  Radio 
Communications  are  estimated  to  decrease  over  the  next  years.  The  increases  for  security 
technologies thus exceed the estimations for defence and security combined) 

Infrared  cameras:  the  exploitation  of  synergies  in  this  sector  only  necessitates  a 
coordinated  R&D  effort,  which  could  be  achieved  through  the  existing  European 
Framework Cooperation. 

C4I  and  Radio  Communication:  are  sectors  where  a  downstream  coordination  and  the 
development of common/hybrid standards for civilian and military use would be needed. 

See the CIV MIL synergies study: 

98 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM   
99 

See Annex 10 "background to quantitative analysis of Civ-Mil synergies. 

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8.3. 

Societal aspects 

The  introduction  of  a  voluntary  EU  standard  for  privacy  by  design  compliant  production 
processes  would  not  guarantee  that  "privacy  by  design"  audits  will  take  place  for  all 
products  and  would  be  undertaken  by  all  companies.  However,  given  the  technical 
difficulties in translating fundamental rights into technical requirements (which in essence 
would also mean 'aligning' ethical considerations throughout the EU), the voluntary auditing 
or production processes would seem a more feasible and reasonable approach. Also it can be 
expected  that  peer  pressure  will  lead  many  companies  to  introduce  voluntarily  such  an 
auditing system, similar to what can be seen for example with regard to audit system in the 
area of bio foods. 

It would be possible through adequate PCP schemes to "test" the societal acceptance of new 
technologies  in  advance  of  their  actual  commercialisation.  This  way  all  the  concerned 
stakeholders,  i.e.  end  users,  industry,  societal  groups  could  be  involved  from  the  early 
stages, thus guaranteeing adequacy and acceptability of the final technologies. 

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List of Acronyms 

CAC 

Conformity Assessment and Certification  

CBRN 

Chemical, Biological, Radiological, and Nuclear 

CCTV 

Closed Circuit TV 

CEN  

European Committee for Standardization 

CENELEC   Comité Européen de Normalisation Électrotechnique 

COM 

Commission Communication  

C4I 

DHS 

EC  

EDA 

EFC  

Command, Control, Computers and Intelligence 

Department of Homeland Security  

European Commission  

European Defence Agency 

European Framework Cooperation 

EFTA 

European Free Trade Association 

EOS 

ESA 

ESO 

European Organisation for Security  

European Space Agency 

European Standardisation Organisation 

ESRAB  

European Security Research Advisory Board  

ESRIF 

European Security Research and Innovation Forum 

ETSI  

European Telecommunications Standards Institute 

EU  

European Union 

EUSECON   A New Agenda for European Security Economics 

FP7 

Seventh Framework Programme  

FRONTEX 

European  Agency  for  the  Management  of  Operational  Cooperation  at  the  External  Borders  of  the 
Member States of the European Union 

GDP  

Gross domestic product 

ISO 

MS  

International Organization for Standardization 

Member State 

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PCP 

POV 

Pre Commercial Procurement  

Pre Operational Validation 

R&D  

Research and Development 

SECERCA 

Study on Security Regulation, Conformity Assessment & Certification 

SBIR 

Small Business Innovation Research  

SDA 

SME 

Security and Defence Agenda 

Small and Medium Enterprise 

SWOT  

Strengths, Weaknesses, Opportunities and Threats 

TFEU 

Treaty on the Functioning of the European Union  

UAS 

UAV 

Unmanned Areal Systems 

Unmanned Areal Vehicles  

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Annexes 

A series of documents related to this analysis have  been made available on the website of 
the security research theme: 

• 

The  executive  summaries  of  the  three  studies  carried  out  by  external  consultants 

can be found under the following link (under studies and Workshops): 

HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM  

Annex 1: Summaries of the Workshops 

Summary  of  CEN/CENELEC/ETSI  Workshop  Launching  Programming  Mandate 
EC-M/487 on the 29th September 2011 

The workshop was attended by around 80 stakeholders from industry, national and European 
standardisation  organisations,  as  well  as  a  number  of  national  ministries.  The  objective  of 
the workshop was to kick-off the work under the programming mandate M/487 on security 
standards.  In  particular,  the  meeting  aimed  at  getting  feedback  from  stakeholders  about 
future standardisation priorities in the area of security.  

There  was  unanimity  that  more  standards  were  required  in  the  security  domain  and  that 
these  standards  should  cover  the  broad  range  from  interoperability  standards  to  test 
protocols,  etc.  As  to  domains  that  would  require  standardisation  as  a  priority,  different 
stakeholders considered different areas as their first priority. However, some areas came up 
in several presentations, such as for example standardisation with regard to CBRN detection, 
secure  interoperable  communications,  as  well  as  border  surveillance  activities  and  critical 
infrastructure protection (in particular buildings and energy networks). 

Summary of the Workshop on Security Industrial Policy: 

The Workshop was held on the 18th of October 2011 in the representation of the European 
Commission to Belgium.  

The participants (~100 persons) to the Workshop included a large number of representatives 
and key stakeholders from the EU Member States (Ministries of research, defence, interior 
and  economics),  Business  associations  (European  Organisation  for  Security,  German 
European  Security  Association,  AeroSpace  and  Defence  Industries  of  Europe),  industry 
representatives  as  well  as  EU  institutions  (The  EU  counter  terrorism  coordinator,  various 
DG's of the Commission). 

The aim of the workshop was to confirm and validate the results of the public consultation 
held  from  March  to  May  2011.  The  Workshop  was  divided  in  four  thematic  sessions: 
Certification and standardisation, Pre Operational Validation/Pre Commercial Procurement, 
Civ Mil Synergies and Third party Limited Liability. 

Main messages from the sessions: 

Certification and standardisation 

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• 

• 

• 

It  was  commonly  acknowledged  that  a  harmonisation  of  the  currently  fragmented 
certification  systems  and  standards  in  the  EU  is  crucial  not  only  to  improve  the 
security  of 
the 
the  European  citizens,  but  also  essential 
competitiveness of the EU security industry on a global scale. 

to  guarantee 

Harmonised  certification  systems  should  not  only  reduce  the  time  to  market,  but 
also  allow  better  cost  to  benefit  ratios  and  reduce  the  current  administrative 
burdens. 

The  main  areas  identified  by  the  stakeholders  as  potential  areas  for  initial 
harmonised  certifications  procedures  were  security  scanners  and  intruder  alarms 
systems. 

Pre Operational Validation/Pre Commercial Procurement,  

• 

• 

The  majority  of  the  participants  expressed  clear  support  for  a  wider  use  of 
POV/PCP  schemes  in  the  area  of  security  research.  This  was  underlined  by  those 
Member States who already gained first experiences with these schemes in security 
research (the Netherlands and  Spain) and by a number of industry representatives 
and  business  associations.  The  importance  of  POC/PCP  in  terms  of  global 
competition was also emphasized by the participants. It was noted that the US has 
already  made  considerable  efforts  in  this  area,  which  resulted  not  only  in  the 
development  of  highly  successful  technologies,  but  lead  also  to  the  creation  of  a 
several new companies. 

Participants  stressed  that  IPR  issues  needed  to  be  thoroughly  addressed  in  any 
future  POV/PCP.  Furthermore,  the  policy  framework  needed  to  be  clearly  set  out 
when embarking on a POV/PCP. 

Civ Mil Synergies  

• 

• 

• 

The  issue  of  a  better  exploitation  of  Civ-Mil  synergies  was  described  by  the 
participants  as  an  area  where  the  EU  is  in  its  fledgling  stages.  While  the  US  has 
already  addressed  this  issue  through  the  "Office  of  Technology  Transition"  in  the 
Department of Defence, the EU has not yet developed a coherent approach on this 
issue. A regrettable negligence in these times of financial crisis. 

The  potential  and  limits  for  Civ-Mil  synergies  should  therefore  be  explored  in  a 
thorough way. 

There  was  agreement  that  developing  hybrid  Civ-Mil  standards  was  a  good  idea, 
but that the area and type of standards (e.g. performance standards, interoperability 
standards) needed to be carefully chosen.  

Third party Limited Liability. 

• 

The issue of third party limited liability was the area in which the least empirical 
knowledge exists in the EU. Some participants argued that this is an area of great 
concern for  the  European  security  companies. This could however not be entirely 
verified, as no in depth study or analysis on this matter has been performed in the 
EU. 

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• 

There was agreement that liability issues were relevant both for products, as well as 
for services. 

Summary  of  World  Standards  Day  Round  Table:  "Standards  as  a  tool  for  Security 
Industrial Policy" 

The conference took place on 14 October 2011 at the Charlemagne building.  

Main messages of the conference: 

• 

• 

• 

• 

• 

The  importance  of  an  EU  security  industrial  policy  to  overcome  the  very 
fragmented  national  and  even  regional  markets  in  this  field  was  underlined. 
Participants highlighted the importance of standards for SMEs producing goods and 
services in the field of emergency management.  

An overview on the content of the newly launched standardisation mandate M/487 
was  given.  CEN,  CENELEC  and  ETSI  will  address  a  broad  field  ranging  form 
counter-terrorism to video surveillance and protection of critical infrastructures via 
a  circumspect  stakeholder 
industry  and 
researchers from Europe and beyond. The main goal will be to analyse these sectors 
through a set of clear criteria to identify suitable areas for standards in security. 

inclusion  encompassing  end-users 

Industry representatives stated that the main goal for Europe in the field of security 
must  be  a  harmonized  market.  Today  fragmentation  and  lack  of  regulation  would 
prevent industry from fully participating thus leaving Europe lacking behind the US 
and Asia in a steadily growing global market. Standards should already be part of 
security  research  projects  as  industry  and  researchers  will  need  money  to  create 
standards. 

It was also underlined that security is not all about standards and technology but the 
foremost  priority  must  be  citizens  "feeling  more  secure"  in  Europe.  Security 
standards should include training standards as well as technological ones.  

The lack of certification in the EU was also named as one of the major hurdles in 
the European security industry environment. Also the creation of an equivalent to 
the IEEE where technicians and standard setters are sitting on the same table could 
be envisaged. 

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Annex 2: Results of the Public Consultation on an Industrial Policy for the Security Industry 

1. Introduction 

On  the  14th  of  March  the  European  Commission  launched  a  Public  Consultation  in 
preparation  of  the  upcoming  Communication  Industrial  Policy  for  the  Security  Industry 
(planned for early 2012). 

2. Consultation document 

The  objective  of  this  consultation  was  to  collect  the  stakeholders’  views  on  the  envisaged 
policy  measures  aimed  at  an  enhancing  the  security  of  the  European  citizens  through  a 
dedicated EU security industry policy. 

Stakeholders  were  invited  to  express  their  opinions  on  the  main  problems  the  EU  security 
industry faces today, namely: 

• 

• 

• 

• 

The fragmentation of the EU security markets, 

The lack of EU wide standards. 

The fragility of the EU industrial base, and 

The integration of societal aspects in the development of security technologies. 

Participants  were  given  the  possibility  to  add  comments  or  suggest  additional  options  to 
those  suggested  by  the  Commission  on  the  majority  of  the  questions.  Respondents  had 
furthermore the possibility to upload documents/position papers on a number of questions in 
the consultation. This opportunity was seized by a large number of participants; around 100 
documents were uploaded by the respondents. 

A  number  of  stakeholders  did  not  fill  out  the  online  questionnaire,  but  sent  in  position 
papers on possible policy measures for an Industrial Policy for the Security Industry. These 
position papers do not appear in the statistics, the content of these papers has nevertheless 
been taken into account in the overall analysis. 

General  remark  on  the  analysis  of  the  consultation:  The  text  passages  in  italic  are  quotes 
taken from the contributions to the consultation. 

Respondents were able to rank their responses on a scale of 1 (do not agree at all/no effect) 
to 4 (agree very much/ very strong effect) 

Two participants submitted a position paper, in which they explained that, according to their 
interpretation,  security  services  should  be  a  part  of  the  questionnaire.  Their  submission  to 
the questionnaire has therefore a different scope, which includes services.  

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3. Responses to the consultation 

The  European  Commission  received  in  total  59  responses  to  the  public  consultation. 
Contributions  were  received  from  stakeholders  in  13  countries  (one  additional  participant 
did not specify his country of origin), including 2 EFTA countries. 

Table1: The respondent's countries of origin 

Number of participations per country

United Kingdom. 10

Austria. 1

Belgium. 11

Switzlerland. 2

Spain. 4

Slovenia. 1

Other. 1

Norway. 1

Netherlands. 1

Luxembourg. 1

Italy. 3

Finland. 2

France. 7

Germany. 14

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Background of the respondents 

The  respondents  can  be  classified  into  ten  main  categories:  micro  or  small  enterprises, 
medium  enterprises,  large  enterprises,  business  associations,  national  administrations, 
Regional  or  local  administrations,  academic  institution  or  think  tank,  non  governmental 
organisation, individuals and others. The high participation of SME's (19%) should be noted. 

Background of the respondents 

Stakeholder category 

Number 
of replies

Percentage 

Micro  or  small  enterprise  (fewer  than  49  employees, 
turnover less than €10 million) 

Medium  enterprise  (between  50  and  249  employees, 
turnover less than €50 million) 

Large enterprise (more than 250 employees) 

A business association 

A national administration 

Regional or local administration 

An academic institution or think tank 

Non governmental organisation 

An individual 

Other 

4. Responses on the chapters 

Subsidiarity principle 

6 

5 

19 

13 

4 

1 

3 

4 

1 

3 

10.20% 

8.50% 

32.20% 

22% 

6.80% 

1.70% 

5.10% 

6.80% 

1.70% 

5.10% 

The initiative of the Commission to launch specific policy measures on a dedicated Security 
Industry  Policy  was  met  with  a  very  large  approval.  A  number  of  participating  Member 
States explicitly welcomed and encouraged the proposals of the Commission, stating that the 
security industry should finally be recognised as a specific industrial sector with a need for 
dedicated policy mechanisms. 

Market fragmentation: 

The need  for the EU to act on the issue of market fragmentation has been unambiguously 
agreed upon by ~ 86% of the participants. Only two out of 59 negated the need for an EU 
action. 

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2.6. Subsidiarity principle   Do you consider that action by the EU would be necessary to reduce 
the market fragmentation? 

Number of requested records 

% Requested records(59) 

Do not know 

Yes 

Yes, partly 

No 

Industrial base 

6 

39 

12 

2 

10.17% 

66.10% 

20.34% 

3.39% 

On the question: "Do you consider that action by the EU would be necessary to reinforce the 
industrial base?" 86% of the participants either answered with "yes" or "yes partly". Not a 
single respondent answered with no. 

3.9.  Subsidiarity  principle     Do  you  consider  that  action  by  the  EU  would  be  necessary  to 
reinforce the industrial base? 

Number of requested records 

% Requested records(59) 

Do not know 

Yes 

Yes, partly 

No 

8 

38 

13 

0 

13.56% 

64.41% 

22.03% 

0.00% 

4.1. Market Fragmentation 

4.1.1 Certification/conformity assessment procedures 

The  vast  majority  of  the  consulted  participants  agreed  with  the  problem  definition  of  the 
Commission that "the lack of harmonised certification/conformity assessment procedures for 
security technologies affects the market fragmentation". Out of 59 replies 33 stated to agree 
very much and 15 stated to agree with the problem definition, only three did not agree. One 
national representative explicitly stated that a true internal market for security is still a vague 
and distant concept.  

The majority of the participants emphasized the absolute urgency to act on the fragmentation 
of the EU security markets, underlining that this is the most pressing policy related concern.  

This large approval was also clearly reflected in the rankings of the suggested options. The 
first  option  "no  change",  in  which  the  certification  would  remain  at  a  national  level,  was 
rejected  by  all  participants.  The  most  favoured  option  of  the  three  possible  choices  was 

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option  three  the  "Step  by  step  approach".  The  Step  by  Step  approach  was  considered  by 
most to be the most realistic path to a harmonised certification system in the EU. One of the 
determining  factors  for  this  assessment  seemed  to  be  the  new  and  diverse  character  of  the 
security sector.  

A  certain  number  of  participants  also  expressed  their  support  for  a  more  direct 
harmonisation  of  EU  certification  procedures,  conceding  however  that  the  implementation 
of a drastic change would probably not be feasible: "Option 2 would be the most desirable 
one but is unrealistic and might take too long to implement."  

Option  1:  No  change  -  certification/conformity  assessment  procedures  will  continue  to  be 
regulated by national systems. 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

12 

46 

1 

0 

0 

20.34% 

77.97% 

1.69% 

0.00% 

0.00% 

Option  2:  EU  wide  harmonised  certification/conformity  assessment  procedures   covering  all  (or 
at least as many as technically possible) security products 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

8 

2 

15 

26 

8 

13.56% 

3.39% 

25.42% 

44.07% 

13.56% 

Option  3:  Step  by  step:  certification/conformity  assessment  procedures  focused  on  certain 
priority areas or priority technologies where there is a clear EU added value. 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

9 

3 

5 

10 

32 

15.25% 

5.08% 

8.47% 

16.95% 

54.24% 

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Central stakeholder positions on harmonised EU certification procedures 

Independently  of  their  background  (SME,  large  industry,  public  authority  etc.),  the 
stakeholders underlined the clear added value of a European-wide certification regime. The 
main expected benefits being: 

• 

• 

• 

• 

Reduction of the duplication of certification procedures 

Reduction of the administrative burden for the supply and demand side 

Enhancement of the competitiveness and growth of the EU security industry and 

Support to the creation of an end to end European Security approach from research 
to commercialisation. 

The  question  of  an  extension  of  a  possible  certification  assessment  procedure  not  only  to 
products but also to systems was also received with a large support, 39 respondents qualified 
it as very useful, 10 as somehow useful and only 2 as not useful. 

4.1.2. Standardisation 

A vast majority of the participants agreed that the lack of standards affects the fragmentation 
of the EU security markets. Out of 59 participants 40 agreed very much, 7 agreed and only 7 
disagreed on the problem definition (question 2.2.1). 

The favoured option of the respondents was, similarly to question 2.1.2., option 3 the "Step 
by  Step  approach"  (Step-by-step  end-user  driven  standardisation  based  on  a  careful 
identification  of  existing,  national,  European  and  international  standards,  via  Commission 
mandates  to  ESO's)  with  an  approval  of  75%  (30  very  agree  much  15  agree)  followed  by 
option  2  (Industry  driven  -  the  Commission  would  stop  mandating  the  ESOs  to  develop 
standards,  but  would  leave  this  process  entirely  to  industry)  with  an  approval  of  30%  and 
option  1  (No  change:  continue  the  ad-hoc,  piece  meal  approach  whereby  the  Commission 
mandates  the  ESO's  to  develop  EU-wide  standards  based  on  immediate  needs.  In  parallel 
industry develops on its own initiative EU-wide standards.) with an approval of 22%.  

The majority of the participants agreed that the establishment of EU wide security standards 
can only be driven by end user requirements. 

"An end-user driven process (Option 3) is crucial for the success of standards, and a step-
by-step approach seems reasonable and realistic." 

EN 

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Option  1:  No  change:  continue  the  ad-hoc,  piece  meal  approach  whereby  the  Commission 
mandates the ESO's to develop EU-wide standards based on immediate needs. In parallel industry 
develops on its own initiative EU-wide standards. 

Number of requested records 

% Requested records(59)     

Do not know 

1 

2 

3 

4 

8 

21 

17 

12 

1 

13.56% 

35.59% 

28.81% 

20.34% 

1.69% 

Option 2: Industry driven - the Commission would stop mandating the ESOs to develop standards, 
but would leave this process entirely to industry 

Number of requested records 

% Requested records(59)     

Do not know 

1 

2 

3 

4 

7 

22 

12 

17 

1 

11.86% 

37.29% 

20.34% 

28.81% 

1.69% 

Option  3:  Step-by-step  end-user  driven  standardisation  based  on  a  careful  identification  of 
existing, national, European and international standards, via Commission mandates to ESO's 

Number of requested records 

% Requested records(59)     

Do not know 

1 

2 

3 

4 

7 

1 

6 

15 

30 

11.86% 

1.69% 

10.17% 

25.42% 

50.85% 

A number of business associations also expressed their interest for a fourth possible option, 
in which standards would be developed within the framework of a Public-Private Dialogue 
and Cooperation. 

EN 

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Possible areas of interest for EU wide security standards 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Border management systems 

Cyber security 

Crisis management and civil protection 

Sensor and system limitations 

Identity management and biometry 

Critical infrastructure protection 

Aviation security (airport scanners) 

CBRNE  

IT security  

PKI  (Public  Key  Infrastructures)  standards  or  cryptographic  mechanisms  and 
secure protocols 

4.2. Fragile industrial base 

The responses to the problem definition on this specific point were relatively evenly spread 
over the possible answers. Categorising the EU security industrial base as generally fragile 
would  not  reflect  the  reality  of  the  markets.  Most  participants  stated  that  the  EU  security 
industrial  base  cannot  be  labelled  as  fragile,  given  that  European  security  companies  are 
among the market leaders in many high tech areas. 

Do you agree that the EU security industrial base is fragile? 

Number of requested records 

% Requested records(59) 

Do not know 

1 

2 

3 

4 

8 

3 

17 

17 

14 

13.56% 

5.08% 

28.81% 

28.81% 

23.73% 

The EU industrial base was however categorised as fragile in a number of specific areas by a 
majority  of  the  participants,  namely  in  terms  of  third  country  competition  (64%  approval) 
and  to  a  lesser  degree  in  terms  of  access  to  finance  (61%  approval).  The  main  aspect  on 
which the participants call for EU action is the strengthening of the competitiveness of the 

EN 

59 

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EU industry on a global scale. A common statement on this issue was submitted by a series 
of different participants (mainly business associations). 

"The industrial base across the EU is however fragile in the sense that it is currently losing 
out  to  industries  in  countries  such  as  the  United  States  in  a  fiercely  competitive  global 
security market; in significant part owing to the support industries outside receive from their 
host  Governments.  The  industrial  policy  framework  for  helping  companies  in  the  EU  to 
compete in the security market is currently insufficient. Subsidies and related initiatives such 
as the US Safety Act mean that the security industry across the EU is losing its competitive 
edge in the global market." 

One of the participating business associations also pointed out two additional factors which, 
according to them, also contribute to the fragility of the EU industrial base, namely: 

• 

• 

"Fragile  in  that  security  solution  and  service  providers  operate  in  a  restricted  and 
highly specialized market" 

"Fragile in terms of large integrators’ dependency on the sustainability and strength 
of  European  SMEs  for  innovative  solutions  and  equipments  […]  Unfortunately 
Europe’s SME base is increasingly vulnerable as administrative burdens and costs 
to  comply  with  an  increasing  amount  of  legal  regulations  is  becoming  more  and 
more  enterprise-threatening.  The  Commission  is  therefore  urged  to  engage  in 
positive action to support the SME base, e.g. by easing their access to funding and 
by simplifying bureaucratic procedures." 

EN 

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3.1.2. Could you please elaborate on what this fragility of the industrial base 
consists of in your view: 

Fragile in terms of third country competition 

Number 
records 

of 

requested 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

8 

2 

11 

13 

25 

13.56% 

3.39% 

18.64% 

22.03% 

42.37% 

Fragile in terms of development of state of the art technologies 

Number 
records 

of 

requested 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

7 

9 

13 

12 

18 

11.86% 

15.25% 

22.03% 

20.34% 

30.51% 

Fragile in terms of access to finance 

Number 
records 

of 

requested 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

9 

3 

11 

12 

24 

15.25% 

5.08% 

18.64% 

20.34% 

40.68% 

EN 

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Fragile in terms of dependency from the primes 

Number 
records 

of 

requested 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

18 

5 

17 

12 

7 

30.51% 

8.47% 

28.81% 

20.34% 

11.86% 

4.2.1. Pre Commercial Procurement 

The  issue  of  Pre  Commercial  Procurement  addressed  in  question  3.2.  of  the  questionnaire 
generated an unequivocal response from the respondents.  

• 

• 

• 

Option 1: No change Pre-commercial Procurement in the area of security would be 
solely done on a national level. Approval rate = 11% 

Option  2:  Pre-commercial  procurement  activities  would  be  carried  out  in  FP8  but 
without specific financing instruments. Approval rate = 20% 

Option  3:  A  focused  pre-commercial  procurement  scheme  being  built  up  via  the 
possible future FP8 and/or CIPII funding. Approval rate = 76% 

A  number  of  participants  underlined  the  crucial  role  Pre  Commercial  Procurement  in  the 
security sector could play in the future attempts to harmonise the EU security markets. Pre 
Commercial  Procurement  schemes  could, 
in  combination  with  certification  and 
standardisation measures, bring together all relevant actors and ensure a better integration of 
the end users and their specific requirements. 

"It  is  especially  important  for  sectors  such  as  security  where  the  primary  customers  are 
public bodies and where applications of innovative technologies are highly regulated." 

"[...] it would be a valuable “route to product” for end-users and security companies across 
the EU." 

4.2.2. Defence and Security Procurement 

The  ratings  of  the  respondents  on  the  two  options  concerning  the  Defence  Procurement 
Directive  did  not  suscitate  any  distinctive  majority,  which  could  allow  a  clear  assessment. 
One  quarter  of  the  participants  choose  the  "do  not  know"  answer,  none  of  the  options 
assembled a clear approval rate. 

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According to the statements made be the participants, this is largely due to the fact that the 
Defence Procurement Directive has only been in place for a relatively short amount of time. 
A judgement of its efficiency would therefore be premature. 

Option 1: No change – The Defence Procurement Directive will now provide a clear and sufficient 
framework to contribute effectively to reducing market fragmentation. 

Number of requested records  % Requested records(59)      

Do not know 

1 

2 

3 

4 

15 

15 

23 

4 

2 

25.42% 

25.42% 

38.98% 

6.78% 

3.39% 

Option  2: Encourage  security  customers  to  pool  their  investment  resources  in  order  to  achieve 
interoperability and economies of scale. 

Number of requested records  % Requested records(59)      

Do not know 

1 

2 

3 

4 

14 

9 

5 

16 

15 

23.73% 

15.25% 

8.47% 

27.12% 

25.42% 

4.2.3. Synergies between civil and defence technologies 

Out of the three options proposed to the participants on synergies between civil and defence 
technologies, the second option "step by step approach" was clearly the one which received 
the most positive answers (53%). Option 3 (a dedicated civil-military research programme 
as part of FP8) had an approval rate of 30% and option 1 (No change) an approval rate of 
15%. 

The majority of the participants expressed their interest in an enhanced cooperation between 
the Commission and EDA on possible Civ-Mil synergies. The establishment of a dedicated 
defence theme was judged to be unrealistic and a possible threat to national defence research 
budgets.  Most  respondents  agreed  that  an  extended  European  Framework  Cooperation 
would be the adequate platform for such an enhanced cooperation. It should be noted that 
most  key  actors  from  large  industry  groups,  business  associations  to  Member  States 
supported this option. 

"In  general,  we  believe  that  the  establishment  of  a  dedicated  civil-military  research 
programme  is  not  necessary,  as  dual-use  research  already  exists  in  the  present  research 

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schemes. In addition, such a dedicated programme could incite national MoDs to cut their 
investments, which would have a globally counter-productive effect. […] has welcomed and 
supported  the  European  Framework  Cooperation  (EFC)  that  has  been  created  to 
systematically synchronize the R&T investment […]." 

Two  participants  also  expressed  their  concern  regarding  a  possible  "militarisation"  of 
civilian  research.  They  stressed  that  security  research  should  only  focus  on  the  civilian 
dimension  and  that  defence  research  should  be  explicitly  excluded  from  EU  security 
research. 

Option 1: No change - the Commission would continue to coordinate research activities between 
FP7 and EDA on an ad-hoc basis 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

10 

31 

9 

7 

2 

16.95% 

52.54% 

15.25% 

11.86% 

3.39% 

Option  2:  Strengthening  synergies  between  civilian  and  defence  technologies  in  a  step  by  step 
approach  via  more  upstream  coordination  at  the  level  of  capability  development  and  more 
downstream coordination at the level of development of standards 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

9 

10 

9 

22 

9 

15.25% 

16.95% 

15.25% 

37.29% 

15.25% 

Option 3: In addition to option 2, this option would go beyond coordinated research activities by 
establishing a dedicated civil-military research programme as part of FP8 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

15 

EN 

13 

18 

10 

3 

64 

22.03% 

30.51% 

16.95% 

5.08% 

25.42% 

   EN 

 
  
  
  
EN 

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4.2.4. International markets 

The  results  on  the  questions  related  to  the  possible  options  on  international  markets  were 
unambiguous.  The  "no  change"  option  was  rejected  by  all  but  three  participants.  The  two 
options which would incite action to open up the international markets for security products 
were both met with an approval of 77%. The third option was slightly favoured, with three 
more rankings "very strong effect" than the second option.  

These  results  reflect  also  the  importance  accorded  by  the  participants  to  the  issue  of  third 
country competition in the context of question 3.1.2. "Fragile industrial base". 

Option 1: No change - the EU would not undertake any specific activities to encourage access to 
third markets for the EU security industry 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

8 

46 

2 

2 

1 

13.56% 

77.97% 

3.39% 

3.39% 

1.69% 

Option 2: Opening up of international markets for security products by making full use of the EU's 
trade policy strategy. 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

7 

1 

6 

21 

24 

11.86% 

1.69% 

10.17% 

35.59% 

40.68% 

Option 3:In addition to option 2 -  the Commission would aim at fostering the adoption of joint or 
common approaches at international level, notably in the area of standards via the International 
Standardisation  Organisation.  The  approach  would  also  provide  an  opportunity  to  raise  the 
visibility of the European security industry around the world. 

Number of requested records 

% Requested records(59)      

Do not know 

EN 

8 

66 

13.56% 

   EN 

 
  
  
 
  
  
  
  
  
  
1 

2 

3 

4 

2 

4 

18 

27 

3.39% 

6.78% 

30.51% 

45.76% 

4.2.5. Third party limited liability protection 

The  question  of  "Third  party  limited  liability  protection"  was  the  issue  with  the  highest 
amount  position  papers  uploaded  by  the  participants.  The  most  active  participants  on  this 
issue were the representatives from the various business associations and the large industry 
groups.  They  submitted  exhaustive  and  detailed  proposals  on  the  creation  of  an  EU  Third 
party limited liability protection system for security technologies. 

The  importance  attributed  by  the  responders  to  the  issue  of  liability  was  translated 
distinctively  in  the  rankings.  Option  1,  under  which  the  EU  would  not  get  active,  was 
rejected  by  80%  and  approved  by  only  3%  of  the  participants.  Option  three,  which  would 
leave the introduction of liability related legislation to the Member States, was also met only 
with an approval around 25%. The only option, which was rated as having a strong effect, 
was option number 2 with an approval of 73%, according to which the EU would introduce 
harmonised rules at EU level on Third Party Liability Limitations. 

It  should  however  be  noted  that  50%  of  the  participating  representatives  from  national 
administrations  judged  the  second  option  to  be  inadequate.  A  civil  rights  group  also 
expressed  their  doubts  on  liability,  stating  that  the  manufacturers  of  security  technologies 
should not be freed from all responsibility. 

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Option  1:  No  change  -  under  this  option  the  EU  would  not  get  involved  in  Third  Party  Liability 
issues 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

10 

44 

3 

1 

1 

16.95% 

74.58% 

5.08% 

1.69% 

1.69% 

Option  2:  Introducing  harmonised  rules  at  EU  level  on  Third  Party  Liability  Limitations  for 
security  products/processes/systems  in  case  of  a  terrorist  incident.  Under  this  option  the  EU 
would  define  under  which  circumstances  and  conditions  companies/system  operators  could 
invoke  Third  Party  Liability  Limitation.  The  EU  would  also  define  the  minimum  or  maximum 
financial compensation up to which companies/system operators would be liable for 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

9 

3 

4 

8 

35 

15.25% 

5.08% 

6.78% 

13.56% 

59.32% 

Option  3:  Encouraging  Member  States  to  introduce  such  legislation  at  national  level  with  the 
Commission as guardian of the Treaty ensuring that such a decentralised approach does not lead 
to internal market barriers. Under this option, the Commission would set out guidelines to help 
Member  States  in  setting  up  Third  Party  Liability  Limitation  schemes  that  would  not  be 
contradictory between different Member States, thus leading to internal market barriers 

Number of requested records 

% Requested records(59)      

Do not know 

1 

2 

3 

4 

EN 

9 

9 

26 

10 

5 

68 

15.25% 

15.25% 

44.07% 

16.95% 

8.47% 

   EN 

 
 
  
  
  
 
4.3. Security of the citizen and the society 

The  problem  definition,  which  stated  that  security  products  need  to  be  privacy  compliant 
from the development to the production (also know as "privacy by design"), was met with a 
large approval. Out of 59 responses 42 (71%) agreed with the problem definition and only 
18% disagreed.  

Do you agree with the problem definition, that security products need to be privacy compliant 
from  the  development  to  the  production?  (ranking  from  1  do  not  agree  at  all  to 4  agree  very 
much) 

Number of requested records 

% Requested records(59)   

Do not know 

1 

2 

3 

4 

6 

6 

5 

15 

27 

10.17% 

10.17% 

8.47% 

25.42% 

45.76% 

4.3.1.  How  to  ensure  the  integration  of  ethical/societal  aspects  in  security 
technologies 

The answers on the appropriate inclusion of societal aspects in security were spread to some 
extend  over  the  various  options.  The  only  option  which  was  clearly  rejected  was  the  first 
option,  under  which  privacy  by  design  would  remain  a  voluntary  effort  for  industry.  This 
option was only approved by 17% of the participants and disapproved by 73%. 

The differences between the other two options were relatively marginal, a slight preference 
for option 2 (voluntary system) was nevertheless expressed. Most representatives from large 
industry  groups  pleaded  for  a  selected  mandatory  certification,  which  would  only  concern 
specific security technologies. 

"We believe that a mandatory certification assessment (option 3) would only be reasonable 
in some areas, but not in all. Hence, a case-by-case decision, respecting the distinctiveness 
of the concerned products/processes, would be far more valuable. " 

Three  participants  furthermore  stated  that  the  scope  of  the  question  was  too  restricted  to 
privacy issues and that a broader approach would be more appropriate to ensure a successful 
inclusion of ethical aspects. 

"Ethical/societal  implications  of  security  research  are  not  limited  to  privacy  issues.  There 
are  for  example  issues  such  as  dual  use  goods,  the  militarisation  of  security,  the  ethics  of 
end users (not exclusively in third countries) and reference to human rights and democratic 
governance  in  security  policy.  Beyond  that,  there  is  an  issue  about  the  privatisation  of 
security  with  the  easier  access  to  cheaper  but  intrusive  technology.  Ethics  must  be  an 
intrinsic part of programme and project design." 

EN 

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Option 1: No change - privacy by design would remain a voluntary effort for industry with no EU 
wide guidelines and/or requirements 

Do not know 

1 

2 

3 

4 

Number 
requested records 

of 

% 
records(59)      

Requested 

6 

35 

8 

1 

9 

10.17% 

59.32% 

13.56% 

1.69% 

15.25% 

Option  2:  A  voluntary  certification/conformity  assessment  system.  Under  this  option  the 
economic  operator  wishing  to  have  his  product/process/system  certified  for  being  "privacy  by 
design"  fit,  would  have  to  fulfil  a  set  of  requirements  defined  by  the  EU.  However,  the 
certification/conformity assessment itself would remain voluntary. 

Do not know 

1 

2 

3 

4 

Number 
requested records 

of 

% 
records(59)      

Requested 

4 

11 

15 

11 

18 

6.78% 

18.64% 

25.42% 

18.64% 

30.51% 

Option 3: In addition to option 2 – the certification certification/conformity assessment would be 
mandatory 

Do not know 

1 

2 

3 

4 

Number 
requested records 

of 

% 
records(59)      

Requested 

10 

18 

12 

5 

14 

16.95% 

30.51% 

20.34% 

8.47% 

23.73% 

EN 

70 

   EN 

 
 
  
  
  
 
 
4.3.2. Certification procedures 

A  majority  (66%)  of  the  respondents  agreed  on  the  usefulness  of  a  merger  between  a 
possible  ethical  certification  procedure  and  a  general  certification  procedure,  instead  of 
having two separate certification procedures. 

4.2  Certification  procedures     Do  you  believe  it  to  be  useful  to  merge  a  possible  ethical 
certification  procedure  as  detailed  in  point  4.1.  with  the  certification  procedures  outlined  in 
point 2.1, instead of having two separate certification procedures? 

Do not know 

Very useful 

Somehow useful 

Not useful 

Number 
requested records 

of 

% 
records(59)      

Requested 

8 

16 

23 

12 

13.56% 

27.12% 

38.98% 

20.34% 

4.3.3. Privacy compliant technologies 

The  respondents  were  finally  given  the  opportunity  to  express  their  preference  on  the 
possible inclusion of the "privacy by design" concept in FP security research as mandatory 
evaluation criteria.  

This  mandatory  inclusion  was  rejected  by  a  slight  majority  (52%)  of  the  participants.  The 
preferred  option  of  58%  was  the  inclusion  of  the  "privacy  by  design"  concept  through 
targeted research projects in the Security Theme of the FP was supported by 58%. 

Option 1: No change - Through targeted research projects in the Security Theme of the FP aimed 
at  developing  "privacy  by  design"  technologies.  These  technologies  could  then  be  applied  in 
future security products, processes or systems. 

Do not know 

1 

2 

3 

4 

Number 
requested records 

of 

% 
records(59)      

Requested 

7 

14 

4 

9 

25 

11.86% 

23.73% 

6.78% 

15.25% 

42.37% 

Option  2:  Making   the  privacy  compliance  a  mandatory  evaluation  criteria  for  all  technology 

EN 

71 

   EN 

 
  
 
 
  
 
related research proposals under the Security Theme of the FP. Under this option, the EU would 
make it mandatory to address privacy by design  in all technology related research proposals of 
the Security Theme of the FP. 

Do not know 

1 

2 

3 

4 

Number 
requested records 

of 

% 
records(59)      

Requested 

6 

13 

20 

8 

12 

10.17% 

22.03% 

33.90% 

13.56% 

20.34% 

EN 

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Annex 3: Sectors of the Security Industry 

This list is not exhaustive, the aim is merely to give an overview of the technologies which 
characterise the different segments. 

Aviation Security  

(cid:31) Airport terminal security systems.  
(cid:31) Airport perimeter security systems.  
(cid:31) Passenger screening systems.  
(cid:31) Hand-held and checked-luggage screening systems.  
(cid:31) Application of RFID systems.  
(cid:31) Airport security command, control & communication IT and hardware infrastructure.  
(cid:31) Reinforced blast-proof aircraft containers.  
(cid:31) Explosives detection systems.  
(cid:31) Security-related renovations and construction projects.  

Maritime Security 

(cid:31) Smart container systems.  
(cid:31) RFID container seal systems.  
(cid:31) Container explosives screening systems.  
(cid:31) Seaport perimeter protection systems.  
(cid:31) Nuclear/Radiological container screening systems.  
(cid:31) Cruise ship & ferry passenger screening systems, including hand-held and checked luggage 
screening systems.  
(cid:31) Deepwater security systems.  
(cid:31) Ship identification systems.  

Border Security  

(cid:31) Border-perimeter interoperable communication systems.  
(cid:31) Virtual border systems.  
(cid:31) Checkpoint, fence and barrier hardware.  
(cid:31) Border-perimeter people screening systems.  
(cid:31) Border-perimeter people and workforce biometric identification systems.  
(cid:31) Explosives screening portals.  
(cid:31) Border-perimeter construction projects.  
(cid:31) Border-perimeter nuclear/radiological screening portals.  

Critical Infrastructure Security  

(cid:31) Governmental critical infrastructure terror mitigation security systems.  
(cid:31) Medical and public health infrastructure terror mitigation security systems.  
(cid:31) Nuclear facilities terror mitigation security systems.  
(cid:31) Critical infrastructure workforce and visitors identification and surveillance systems.  
(cid:31) Communication infrastructure terror mitigation security systems.  
(cid:31) The government and private sector I.T. critical infrastructure security systems.  
(cid:31) Critical Infrastructure perimeter protection systems.  
(cid:31) Dams terror mitigation security systems.  
(cid:31) Large high volume structures terror mitigation security systems.  
(cid:31) Transportation industry terror mitigation security systems.  
(cid:31) Banking and financial industry business continuity.  

EN 

73 

   EN 

 
 
(cid:31) Energy infrastructure security systems.  
(cid:31) Workforce and visitor identification systems.  

Counter-Terror Intelligence Market 

(cid:31) Command, control and communication systems.  
(cid:31) Cyber space monitoring systems.  
(cid:31) Cyber terror remediation systems.  
(cid:31) Perimeter security systems.  
(cid:31) Data fusion IT systems.  
(cid:31) Land-based imagery systems.  
(cid:31) Communication interoperability systems.  
(cid:31) Information analysis software  
(cid:31) Cyber security IT systems.  
(cid:31) Cyber surveillance IT systems.  

Physical Security Protection 

(cid:31) CCTV systems  
(cid:31) Fire alarm systems  
(cid:31) Intruder alarm systems  
(cid:31) Burglar alarm systems  
(cid:31) Communication systems.  

Protective Clothing 

(cid:31) CBRN personal protection gear.  
(cid:31) CBRN air filtering systems 
(cid:31) Protective clothing for police forces 
(cid:31) Protective clothing for fire fighters 
(cid:31) Search and rescue equipment.  

EN 

74 

   EN 

 
 
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Underlying drivers

Problems

Consequences

Lack of information about security technologies and 
capabilities

Lack of an appropriate framework

Highly fragmented  security end-users

Slow speed of  certification procedures

Absence of clearly defined EU wide performance 
standards 

Absence of EU wide certification systems

Lack of common EU approaches to procurement

Diverging approaches on ethical issues by Member States 

Lack of ethical standards for security technologies

Increased costs for privacy requirements

Use of Civil Military synergies

The gap between 
research and 
market

The fragmentation 
of the EU security 
markets 

The uncertainty of 
societal acceptance 
for security 
technologies

Waste of R&D investment from supply and demand side

Lack of interest to invest in new R&D concepts / R&D concepts are 
not brought to market

Purchase of inadequate technologies

Weakened competition of EU companies on the global level

Untapped civ-mil synergies

Aggravation of the commonly existing high barriers to market entry, 
particularly at the ‘high-end’ of the ‘new’ security market.

True economies of scale cannot be realised

Lack of competition among suppliers

Suboptimal use of public money 

Untapped civ-mil synergies

Reduced willingness to invest

Hurdles to the commercialisation of technologies

Lack of useable technologies

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex  5:  Overview  of  the  most  important  challenges  to  the  internal  security  of  citizens 
among the EU 27. 

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Annex 6: Definition of Pre-Commercial Procurement 

The EU definition as stated in the 2007 Communication on PCP:100 

“For  the  purpose  of  this  communication  "pre-commercial  procurement"  is  intended  to 
describe an approach to procuring R&D services other than those where "the benefits accrue 
exclusively  to  the  contracting  authority  for  its  use  in  the  conduct  of  its  own  affairs,  on 
condition that the service provided is wholly remunerated by the contracting authority" and 
that does not constitute State aid.  

More specifically in pre-commercial procurement: 

(1) The scope is R&D services only: R&D can cover activities such as solution exploration 
and design, prototyping, up to the original development of a limited volume of first products 
or services in the form of a test series. "Original development of a first product or service 
may include limited production or supply in order to incorporate the results of field testing 
and  to  demonstrate  that  the  product  or  service  is  suitable  for  production  or  supply  in 
quantity to acceptable quality standards". R&D does not include commercial development 
activities such as quantity production, supply to establish commercial viability or to recover 
R&D  costs,  integration,  customisation,  incremental  adaptations  and  improvements  to 
existing products or processes. 

(2)  The  application  of  risk-benefit  sharing:  In  pre-commercial  procurement,  the  public 
purchaser does not reserve the R&D results exclusively for its own use: Public authorities 
and  industry  share  risks  and  benefits  of  the  R&D  needed  to  develop  new  innovative 
solutions that outperform those available on the market. 

(3)  A  competitive  procurement  designed  to  exclude  State  aid:  Organising  the  risk-  benefit 
sharing  and  the  entire  procurement  process  in  a  way  that  ensures  maximum  competition, 
transparency,  openness,  fairness  and  pricing  at  market  conditions  enables  the  public 
purchaser to identify the best possible solutions the market can offer.” 

A more pragmatic definition of PCP is: 

PCP  (pre-commercial  procurement)  is  a  procedure  for  the  public  procurement  of  R&D 
services.  PCP  schemes  cover  phase  1  to  phase  3  of  the  innovation  cycle  from  solution 
exploration definition to test-series production and field-testing, just before the commercial 
stage.  

PCP is not simply a procurement of R&D services, which would imply that the IPR belongs 
to the procurer, because in the case of PCP the whole idea is that IPR should remain with the 
supplier,  in  order  to  enable  him  to  develop  other  markets.  But  if  in  R&D  service  IPR 
procurement is left to the supplier, then it legally becomes R&D support, and 100% R&D 
support by public authorities would be considered as an illegal state aid.  

The answer to this dilemma is to leave the IPR to the supplier, who in return must concede 
some  advantage  to  the  public  procurer,  either  a  price  discount  on  the  resulting  product,  or 
some modality of IPR sharing or royalty or licensing agreement. This amounts to an overall 

100 

COM  (2007)  799  on  Pre-Commercial  Procurement:  Driving  innovation  to  ensure  sustainable  high 
quality public services in Europe  

EN 

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sharing of the risks and benefits of the project between the public authorities and the private 
suppliers3.  

In essence, pre-commercial procurement is a mutual learning process for the procurers, the 
users  and  the  suppliers.  When  it  comes  to  tackling  a  concrete  public  sector  problem,  it 
enables  all  concerned  to  get  a  firm  confirmation,  about  both  the  functional  needs  on  the 
demand side and the capabilities and limitations of new technological developments on the 
supply side.  

Primary objectives of PCP are those bridging the gap between R&D and commercialisation, 
such as: 

• 

• 

• 

• 

• 

• 

Integrate the end-users in the R&D process (creating a link between R&D support 
programmes  and  procurement  needs,  coordinating  funders,  prescribers,  procurers 
and end-users) 

Initiate  demand-driven  R&D  procurement  rather 
than  supply-driven  R&D 
procurement  Secondary  objectives  of  PCP  are  those  intending  to  maximise  the 
efficiency and effectiveness of the programme such as: 

Bring R&D concepts that are promising for the public sector quicker to the market 

Increase SME involvement in innovation 

Develop  higher  quality  and  better  prices  products 
development 

thanks 

to  competitive 

Increase the degree of interoperability between participants. The desired degree of 
interoperability  needs  to  be  integrated  as  a  key  objective  from  the  start.  Indeed, 
efforts  after  each  R&D  phase  to  achieve  interoperability  and  product  inter-
changeability  between  the  alternative  solutions  being  developed  pave  the  way  for 
open standards. 

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Annex 7: Competitiveness Proofing – Two illustrative cases 

The EU Security Industry encompasses many different segments. The competitive situation 
of these segments varies.  

This  Annex  aims  at  illustrating  this  variety  of  situations  and  likely  effects  by  providing  a 
more  detailed  analysis  of  two  very  different  segments.  ‘Airport  scanners’  are  part  of  what 
may  be  considered  the  high  tech,  high  value  ‘new’  security  industry  that  has  developed 
particularly  in  response  to  terrorism  threats.  By  contrast  the  medium  tech,  lower  value 
"alarm systems" represent part of what may be considered the ‘traditional’ security industry.  

7.1. The airport scanners segment101 

7.1.1. Industry structure 

The  supply  of  security  inspection  and  screening  equipment  for  the  transport  sector  is 
concentrated  among  a  few  international  players,  mainly  from  the  US  and  Europe.  These 
include companies such as Morpho (Safran), Smiths Detection and Rapidscan in the EU, and 
L3, SAIC and  AS&E  in  the US. The  development  of  the  sector  has  been characterised by 
strategic acquisitions, notably by several companies strongly connected to the defence sector 
that  have  sought  to  strengthen  their  position  in  the  civil  security  sector.102  Alongside  the 
handful of leading players are a few medium and smaller companies that tend to be focussed 
on the development of specialised niche products or specific technologies. It may be noted, 
also,  that  some  companies  maintain  linkages  to  the  health  sector  (i.e.  through  the  use  of 
similar technologies required for health imaging) while other companies have been set up to 
commercialise technologies resulting from academic research.  

7.1.2. Value chain 

In  terms  of  technology  development  and  upstream  linkages  to  component  suppliers,  the 
situation  of  providers  of  security  inspection  and  screening  equipment  (OEMs  -  Original 
Equipment  Manufacturers)  can  differ  depending  on  the  technology  expertise  within  the 
company  (or  other  companies  within  the  same  group).  Depending  on  this  expertise,  main 
components may be either produced ‘in-house’ (or from within the group) or acquired from 
specialised  external  components  and  sub-system  suppliers  based  on 
the  OEMs 
specifications. However, for OEMs supplying the security market, the specific value-added 
derived from these components is typically low, and their main source of value-added comes 
from  equipment/systems  design,  and  technology  and  software  development.  Currently,  in 
the  absence  of  major  changes  in  underlying  technology,  software  development  is  an 
increasingly  important  driver  value  added  for  security  screening  equipment.103  A 
consequence  of  this  situation  is  for  OEMs  to  move  away  from  vertically  integrated 

101

102

103

For additional background information on the airport security screening equipment sector see “Study on the competitiveness of 
the EU Security Industry” (2009) and the SECERCA study (2011). 
Examples  of  M&A  activity  in  the  transport  security  sector  include:  SAIC  acquisition  of  Reveal  Imaging  in  2010;  Safran 
(Morpho)  acquisition  of  GE  Homeland  Protection  in  2009;  L3  acquisition  of  Perkin  Elmer’s  Detection  systems  business  in 
2002; Smiths Detection acquisition of Heinmann Systems in 2002; OSI acquisition of Rapiscan Security Products in 1993. 
The  main  EU  and  US  companies  distinguish  themselves  on  the  basis  of  proprietary  technologies  that  offer  specific 
enhancements  to  the  user  (e.g.  higher  resolution  images,  greater  differentiation  of  substances,  faster  processing,  etc.).  This 
requires  considerable  investments  in  research  and  technology  development,  in  particular  focussed  on  ‘soft’  elements  that  are 
largely  specific  to  the  security  to  security  requirements  (e.g.  data  processing  and  algorithms  for  threat  interpretation  and 
assessment). 

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production towards the integration of sub-systems whose production is sub-contracted out to 
specialised  providers.  Thus,  the  focus  of  OEMs  is  increasingly  on  the  core  processes  of 
R&D, technology development and software development.104  

Typical  manufacturing  activities  –  which  increasingly  relates  to  final  assembly  –  is 
undertaken ‘in-house’ and at the main business locations of equipment suppliers (i.e. USA, 
W.  Europe).  This  reflects  the  need  for  close  oversight  of  product  assembly  and  for 
maintaining  proximity  between  manufacturing  activities  and  technical  and  systems 
development activities.105 Smaller companies (e.g. producers of specialised equipment) may 
outsource  manufacturing/assembly  activities  but  this  is  generally  not  the  case.106  There  is, 
however, the possibility that manufacturing and assembly activities may be relocated outside 
of US/Europe, partly to reduce costs but also in response to market opportunities.107 Another 
aspect of production that may eventually become subject to outsourcing and/or off-shoring 
is  software  development,  which  can  be  extremely  labour  intensive108.  However,  software 
development is currently considered a core process and major source of value added and, in 
addition, an area of particular sensitivity for governments (and customers).  

7.1.3. Competitive position of the EU industry109 

The  major  American  and  European  companies  are  competing  with  each  other  at  a  global 
level, although subject to the specific peculiarities and preferences within the main Western 
and other international markets. Given the relative size and growth of the US market and the 
preference of national administrations for local suppliers, it is unsurprising that many of the 
major global players are US-based companies. Even for the main EU-based companies, it is 
evident that access to the US market has been a crucial factor in enabling them to occupy 
their current market position. 

Looking below the first-tier of what are essentially global players, the European inspection 
and  screening  equipment  sector  industry  appears  somewhat  fragmented  and  fragile.  The 
remainder of the sector is characterised by companies of relatively limited size, focussed on 
the development of specific technologies and/or offering specialised or niche products to the 
market.  However,  they  have  neither  the  size  nor  the  capability  to  compete  with  the  major 
player,  with  whom  they  must  often  develop  partnerships to have access to broader market 
segments. 

104

105

106

107

108

109

This may be  mitigated somewhat when the company (or company group) is engaged in supplying technologies/equipment to 
markets other than security (e.g. health, or industrial applications). For companies that are part of a larger group, components 
and  sub-systems  may  be  supplied  from  within  the  group  thus  retaining  a  greater  degree  of  vertical  integration.  For  smaller 
companies,  their  core  expertise  may  be  in  one  of  the  main  component/sub-systems  fields,  for  which  they  supply 
equipment/applications to a wider market than just security. 
An  additional  factor  in  production  location  decisions  relates  to  equipment/technologies  that  may  be  classified  by  national 
authorities, which may inhibit location of production activities outside of Europe and/or the USA. 
An  exception  is  in  the  manufacturer  of  the  cabinets  in which equipment  is  housed,  for  which  OEMs  can  look for  ‘low  cost’ 
supply opportunities; for example, Smith’s Detection is sourcing cabinets from Eastern Europe. 
For example, in 2006 Smiths detection opened an x-ray production/assembly site in St Petersburg to serve the growing Russian 
market 
For  example,  Smith’s  Detection  indicates  that  automatic  explosives  detection  software  development  required  ½  million  man 
hours. Source: “Opportunities to create value” presentation made at Smith’s Detection Investor Day, 27 January 2009, available 
at: HTTP://WWW.SMITHS-GROUP.COM/PRESENTATIONS.ASPX 
Information  on  the  global  market  position  of  EU  suppliers  of  security  inspection  and  screening  equipment  is  not  readily 
available  and  estimates,  where  they  exist,  are  subject  to  wide  differences.  Moreover,  security  inspection  and  screening 
equipment is not identifiable from existing product classification used for the collection if international trade data. 

EN 

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Figure 1  Stylised supply/value chain for aviation security screening equipment110 

Component 
Suppliers

Core processes

R & D 
System Design 

Specifications

Software

(30%) 

X-ray camera & 
generator
(30%) 

Detectors & imaging
(30%)

Metalwork / cabinet
(10%)

Health 

applications 

Industrial 
applications 

Screening  
Equipment
Suppliers  

Final Assembly

Systems developers and 
integrators

Customers
(airports, air carriers, cargo 
handlers, freight forwarders, 
customs, etc.) 

In  terms  of  other  international  competitors,  the  only  significant  company  in  the  aviation 
security  inspection  and  screening  equipment  sector  is  the  Chinese  company  Nuctech111. 
Nuctech is able to build on its direct linkage into the research capacity and network of the 
University  of  Tsinghua,  while  taking  advantage  of  lower  production  costs  than  its  main 
rivals. The company has had some success in obtaining contracts in Europe and notably in 
geographical markets that are of strategic interest to the Chinese state. The growing presence 
of this ‘low-cost’ player in the global market presents a challenge to EU and US companies, 
particularly in a market that may become increasingly cost conscious. Price competitiveness 
is an important factor in the overall competitive position of suppliers but, given the limited 
scope  to  compete  on  price  alone,  American  and  European  suppliers  need  to  maintain  and 
protect  their  technological  lead  –  and  also  reputation  and  service  quality  –  to  remain 

110

111

Based on the example of x-ray based systems. Numbers in parentheses indicate the approximate breakdown of cost elements in 
final equipment. 
FISCAN  (Beijing  Zhongdun  Anmin  Analysis  Technology  Co.  Ltd)  is  another  Chinese  company  supplying  x-ray  and  other 
security equipment. FISCAN is a subsidiary security division of First Research Institute of Ministry of Public Security. 

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competitive. This is especially the case in the broader international marketplace, notably in 
markets  such  as  Asia  and  the  Middle  East  where  aviation  demand  and,  hence,  security 
requirements are expected to grow rapidly in the future. 

7.1.4. The EU industry's regulatory handicap 

The  current  situation  of  security  regulations,  standards  and  procurement  systems  affecting 
aviation security screening equipment is considered to have a significant negative effect on 
market efficiency and the competitive situation of EU aviation security screening equipment 
sector. Lack of harmonisation creates fragmented markets that translate into higher costs and 
reduced  opportunities  for  achieving  economies  of  scale  for  equipment  suppliers  orientated 
towards  European  markets.  In  addition  to  the  implications  that  this  situation  has  for  price 
competitiveness, there is concern that the fragmented nature of the European market might 
have  the  effect  of  reducing  the  overall  level  of  R&D,  technology  development  and 
innovation.  Specifically,  market  fragmentation  implies  higher  barriers  of  entry  for  the 
adoption  of  new  technologies  within  the  market,  potentially  reducing  the  return  on 
investment in development. Consequently, there may be a negative effect on the competitive 
position  of  European  suppliers  as  a  result  of  insufficient  investment  in  technological 
developments and innovation. 

In  general  the  business  environment  in  the  EU,  including  the  negative  consequences  of 
market  fragmentation,  is  seen  as  less  supportive  for  the  development  of  the  security 
inspection and screening equipment sector than in the US.  

Illustration: US comparison 

The US represents the main competitor to the EU in the aviation security screening sector - 
and  for  the  security  industry  in  general  –  and  is  the  largest  single  market  for  aviation 
security  equipment  and  systems.  In  terms  of  factors  shaping  the  business  environment  for 
suppliers  of  aviation  security  screening  equipment  and  systems,  two  features  of  the  US 
situation are of particular relevance: 

•  A  single  Federal  authority  –  the  Transport  Security  Administration  (TSA)  –  is 
responsible  for  setting  the  approach  to  aviation  security  and  technology  adoption,  for 
determining performance requirements, for evaluating and approving security equipment 
and, finally, for the procurement and deployment of equipment.  

•  The  SAFETY  Act  provides  for  the  reduction  of  liability  risks  for  manufacturers  and 
distributors of anti-terrorism technologies. Further DHS designation and certification112 
under the Act provides de facto approval of security equipment and technologies that is 
recognised in global markets.  

Compared to the present EU situation, the US market is characterised by: 

•  Lower  costs  of  supplying  the  market,  both  in  terms  of  the  costs  associated  with 
compliance  (conformity  assessment)  and  approval  (certification)  of  equipment  and 
systems, and more generally for securing markets.  

112

The  Act  provides  for  two  levels  of  approval:  (i)  designation  and  a  qualified  anti-terrorism  technology  and,  for  more  mature 
technologies, (ii) certification as a DHS approved product. 

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•  Lower  uncertainty  over  the  potential  market  size  for  new  security  products  and 
technologies;  there  is  a  single  US  positions  on  the  utilisation  of  technologies  and 
performance standards/requirements. 

•  Lower risk attached to investments in research, technology development and innovation 

activities,  both because of more certain market potential and liability situation. 

•  Shorter ‘time to market’ for new security technologies and innovations. 

Among the elements identified as important for the development and future competitiveness 
of the sector in the EU the following may be noted: 

•  Disparities  in  legislation  over  airports  and  air  carriers  across  Member  States.  The 
regulatory environment at international, EU and national level plays an important role in 
shaping demand for aviation security inspection and screening equipment. EU legislation 
provides  an  overall  framework  for  aviation  security  that  aims  to  impose  common 
standards  for  security  requirements  across  all  Member  States  but  the  responsibility  for 
implementation and for setting specific requirements within this framework remains with 
the  Member  States.  Disparities  in  legislation  across  Member  States  mean  that  demand 
side actors (e.g. airports, air carriers, and freight forwarders) are unable to adopt uniform 
security systems throughout the European market, which has the effect of increasing cost 
while  making  economies  of  scale  unfeasible.  Thus,  companies  and  other  organisations 
that  need  to  comply  with  air  transport  security  requirements  must  adapt  to  different 
Member  States’  legislations  if  their  activities  are  cross-border  and  internationally 
oriented.  This  implies,  for  instance,  that  airlines  may  have  to  purchase  and  utilise 
different sets of screening technology and equipment depending on the country in which 
they are operating. 

The  regulatory  framework  can  also  present  a  barrier  to  the  introduction  of  new 
technologies.  The  present  EU  regulatory  framework  defines  a  list  of  eligible  methods 
and  technologies  for  passenger  screening  and  airports  are  not  permitted  to  replace 
systematically  any  of  the  recognized  screening  methods  with  alternative  technologies 
until they are added to the legally binding list of eligible methods. While the regulations 
are  aimed  at  ensuring  common  minimum  standards,  it  is  argued  that  they  have  slowed 
down  the  introduction  of  new  technologies  such  as  LAG  (liquid,  aerosol  and  gel) 
screening  equipment  and  security  scanners  (a.k.a.  ‘advanced  imaging  technologies’  or 
‘body scanners’). 

•  EU airport scanner producers confronted with a multiplicity of security standards and 
certification  systems  within  the  EU.  EU  regulations  define  minimum  performance 
standards for a number of screening technologies used in the aviation sector but Member 
States retain both the right to choose the technologies they employ and, where warranted 
by  the  security  situation  of  the  individual  Member  State,  the  prerogative  to  set  more 
in 
stringent  performance 
collaboration  with  ECAC  has  made  strides  towards  the  development  of  common 
performance standards for several categories of aviation security equipment, and ECAC 
has  put  in  place  a  framework  for  the  evaluation  of  security  equipment  used  in  the 
aviation sector (ECAC Common Evaluation Process (CEP)), approval (certification) of 
equipment  remains  at  a  national  level  and  does  not  preclude  national  authorities  from 
subjecting screening equipment to their own national testing and validation procedures. 

the  European  Commission, 

requirements.  Although 

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Thus,  despite  a  common  overall  EU  framework  for  aviation  security,  differences  in 
national  approaches  and  requirements  persist.  These  differences  can  be  particularly 
pronounced  when  they  concern  the  evaluation  and  introduction  of  new  security 
technologies  and  solutions.  This  results  in  cases  where  equipment  may  be  certified  in 
one Member State but may not be certified in another. This can be contrasted with the 
situation in the USA, where certification is a federal responsibility and where the ‘hands 
on’  approach  taken  by  the  Transportation  Security  Administration  is  seen  as  more 
conducive  to  the  development  and  eventual  adoption  and  certification  of  security 
technologies/equipment. 

The air transport industry and related stakeholders consider that international standards 
for the screening of passengers, their cabin and hold baggage and, eventually, air cargo 
would  have  the  potential  to  increase  security,  while  also  driving  down  costs  down  for 
users. The lack of common international standards and certification (or, alternatively the 
multiplicity  of  standards  and  certification  systems  within  the  EU)  is  seen  as  having  an 
unnecessary  negative  impact  on  the  global  outreach  of  EU  security  equipment 
manufacturers. On the one hand, suppliers serving the EU market incur additional costs 
and  procedural  delays  that  result  from  the  need  to  obtain  certification  for  different 
Member  States  (since  there  is  no  system  for  mutual  recognition  of  approvals).  On  the 
other  hand,  in  markets  outside  the  US  and  Europe,  US  certification  –  for  which 
procedures  seem  to  largely  favour  US-based  equipment  suppliers  –  is  taken  as  a  more 
relevant  demonstration  that  equipment  meets  necessary  operational  standards  than 
national-level  EU  certification.  Accordingly,  the  absence  of  common  EU  certification 
place EU equipment providers at a competitive disadvantage, as it deprives them from a 
large and integrated home market enjoyed by the US competitors113. 

Illustration:  Costs  of  Conformity  assessment  and  certification  of  screening 
equipment 

An  industry  source  has  indicated,  for  example,  that  the  cost  of  a  single  test  of  an 
Explosive  Detection  System  (EDS)  could  be  in  the  region  of  €65  thousand  and  for  a 
liquid  explosive  system  (LAGS)  the  figure  may  vary  from  €30  to  €75  thousand;  these 
figures relate to a single test procedure and do not take into account any repeat testing 
that  may  be  required.  The  aforementioned  products  are  relatively  small  systems  and 
costs  associated  for  larger  systems  are  reputed  to  be  significantly  higher  and  may  run 
into several hundred thousand Euros; for example, an amount of €100 thousand has been 
indicated for an ‘imaging test’ for a cargo scanner while a figure of €500 thousand has 
been  indicated  for  the  cost  of  the  certification  process  for  a  biometric  identity  card 
model. 

•  Legal  uncertainty  about  what  legislation  will  consider  as  ethically  or  socially 
acceptable. The aviation security equipment market is also clearly influenced by public 
attitudes towards the acceptability of security technologies. The debate surrounding the 
use  of  ‘security  scanners’  (otherwise  known  as  ‘body  scanners’  or  ‘advanced  imaging 

113 

See Annex 4 (Background to the quantitative analysis of certification) for a description of specific estimates  of relevant cost 
items and cost impacts associated to conformity assessment and certification. 

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that  may  be  raised  by 

technology’) for screening passengers in the aviation sector provides a clear example of 
the  kinds  of  ethical  concerns 
the  use  of  security 
equipment/technologies.  While  the  EU  is  moving  towards  the  deployment  of  ‘security 
scanners’,  it  has  been  made  clear  that  if  security  scanners  are  deployed  “health  and 
fundamental rights must be safeguarded along with personal data, dignity and privacy” 
114  and  passengers  should  be  given  the  right  to  refuse  body  scanning  and  submit  to 
alternative  screening  methods.  This  situation  leaves  open  the  possibility  that  national 
authorities may adopt quite different positions when addressing ‘ethical’ issues. In turn, 
this  may  further  contribute  to  the  fragmentation  of  the  EU  market.  The  hesitant  EU 
approach  is  in  contrast  with  that  of  the  USA  where  they  have  pushed  forward 
development  (e.g. support for R&D) of the  ‘body scanners’  and where the TSA began 
deployment  in  2007.  Currently,  there  are  approximately  510  advanced  imaging 
technology units at more than 90 airports.115  

While the aforementioned characteristics of the EU market are applicable to all suppliers of 
screening technologies used in the aviation sector whether they be EU based, American or 
from elsewhere. However, they disproportionately affect EU companies insofar as they rely 
more  on  the  EU  marketplace.    Consequently,  they  imply  that  EU  suppliers  of  aviation 
security  equipment  incur  higher  market  access  costs  and  risk  ‘premiums’  on  investment 
activities  than,  for  example,  their  main  competitors  from  the  US.  These  ‘additional’  costs 
have  a  negative  impact  on  the  sectors  competitiveness  and  may,  in  a  negative  future 
scenario,  contribute  to  weakening  of  the  EU’s  competitive  position  and  to  an  eventual 
relocation  of  activities  outside  the  EU,  either  to  the  US  or  to  locations  with  high  market 
growth potential. 

7.1.5. Competitiveness implications of the envisaged policy initiatives 

•  The  impact  of  harmonized  standards,  conformity  assessment  and  certification.  The 
development  of  EU-wide  harmonised  standards  and  conformity  assessment  (testing) 
certification  procedures  should  reinforce  existing  efforts  (e.g.  ECAC  CEP)  towards 
common  approaches  for  testing  conformity  with  EU  performance  requirements.  A 
system enabling single EU certification (or mutual recognition of national certification) 
would remove the need for airport screening systems to undergo multiple national testing 
and  approvals  to  be  accepted  in  the  EU  market.  This  should  reduce  the  associated 
compliance  costs  and reduce costs incurred to adapt products  to comply  with differing 
national  requirements/specifications  and  national  conformity  assessment  procedures116; 
notably  if  the  latter  are  implemented  on  an  ad  hoc  basis  for  specific  technologies  and 
solutions.  Moreover,  EU  conformity  assessment  procedures  and  certification  would 
reduce the need for potential customers (and relevant authorities) to undertake their own 
product trials. 

EU-wide harmonised standards and conformity assessment and certification procedures 
may  facilitate  more  rapid  product  development  processes  and  reduce  ‘time  to  market’. 
This possibility will, in part, depend on the extent that relevant regulations and standards 
serve  to  indicate  performance  (and  other)  characteristics  required  to  meet  future 

114

115

116

European  Parliament’s  Transport  Committee.  See:  http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+IM-

PRESS+20110523IPR19946+0+DOC+XML+V0//EN&language=EN 
Source: http://www.tsa.gov/approach/tech/ait/index.shtm 
See  Section  7.2  (Quantitative  Comparison  of  the  Options)  and/or  Annex  4  (Background  to  quantitative  analysis  of 
certification).  

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regulatory  and  market  needs.  Further,  an  EU  infrastructure  for  conformity  assessment 
may also support the development process; for example by engaging in development and 
pre-certification testing. This would move the situation closer to that in the USA where 
there  is  greater  on-going  interaction  between  the  TSA  and  equipment  suppliers 
throughout the development phase of new aviation security technologies and solutions. 

It seems unlikely that an EU-wide approach would significantly affect market access for 
the major players in the sector that operate at a global level. But, by removing the need 
to  submit  to  national  approval,  it  may  facilitate  their  ease  of  access.  An  EU-wide 
approach may have a positive effect on the competitiveness position of SMEs. In so far 
as EU certification serves as a recognised mark of product performance within the EU 
market, it may facilitate them in supplying systems to the major players in the sector. 

To the extent that reduced conformity assessment and certification costs are passed on to 
consumers,  an  EU-wide  approach  would  improve  the  price  competitiveness  of  EU 
producers. Further, by reducing barriers to market access, an EU-wide approach should 
increase market openness and enhance customer choice.  

Finally, an EU-wide certification scheme demonstrating compliance to all necessary EU 
requirements  may  reduce  consumer  ‘uncertainty’  over  product  performance  that  could 
occur  with  different  national  conformity  assessment  and  approval  procedures.  It  could 
therefore reduce transaction costs for producers and buyers, turning the EU into a more 
supportive home market. 

•  The  impact  of  Pre-commercial  procurement  (PCP).  The  aim  of  a  EU  common 
approach  on  PCP  is  to  help  bridging  the  gap  between  research  and  markets.  This  is 
unlikely  to  have  a  major  impact  on  this  industrial  segment  as,  for  the  most  part,  the 
ultimate  purchasers  of  aviation  security  equipment  and  systems  are  private  sector 
companies. 

•  The impact of third party liability limitation. As aviation security screening equipment 
and systems are employed primarily in an anti-terrorism context the issue of third party 
liability is of high importance to the sector. 

•  The impact of voluntary scheme for “privacy by design”  audits.  The  proposed  policy 
actions  envisage  only  a  voluntary  scheme  for  “privacy  by  design”  audits.  As  such, 
suppliers of aviation screening systems are unlikely to implement such audits unless it is 
seen  to  be  in  their  commercial  interest  to  do  so.  However,  if  audits  become  a  market 
requirement,  this  may  impose  significant  additional  costs  on  industry;  in  particular  if 
compliance  with  audit  processes  necessitates significant  reorganisation  of  development 
and production processes.  

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Implications  for  the  international  competitiveness  of  the  EU  industry.  If  successful  in 
reducing market fragmentation in the EU, the proposed policy actions should raise overall 
EU  market  efficiency  in  the  aviation  security  screening  sector.  However,  an  EU-wide 
approach to standards, conformity access and certification may also increase the openness of 
the EU market to non-EU suppliers. In this regard, For EU companies to take advantage of 
enhanced  access  to  the  EU  market  as  a  whole  may  require  also  responding  to  increased 
competition from non-EU suppliers. 

Cost reductions resulting from an EU-wide approach would only have a limited impact on 
the  price  competitiveness  of  EU  products  on  international  markets  in  the  short  term. 
Nonetheless,  there  may  be  dynamic  effects  if  a  less  fragmented  EU  market  encourages 
investment in research, technology development and innovation. In particular, to the extent 
that  the  proposed  actions  are  associated  to  a  clear  EU  approach  to  aviation  security  (and 
regulation,  thereof)  then  this  should  enhance  the  attractiveness  of  investments  in  relevant 
security technologies.  

An  EU-wide  certification  scheme  (and  corresponding  EU  security  performance  ‘mark’  or 
‘quality  label’)  may  strengthen  broader  international  market  awareness  and  acceptance  of 
EU products. 

7.2. The alarms segment117 

7.2.1. Industry structure 

A  relatively  small  number  of  major  players  dominate  both  the  US  and  the  EU  market  for 
electronic security products, including intruder and fire alarms. Tyco, UTC, and Honeywell 
are  the  main  manufacturers  of  product  systems  that  are  marketed  worldwide.118  Since  the 
mid-90s the major players led an 'acquisition crusade', buying up medium and small security 
products  manufacturers.119  This  resulted  in  considerable  consolidation  and  rationalization 
within the sector. Bosch and Siemens120 are the largest players in the European market and 
both  companies  pursued  an  acquisitions  led  approach  to  enter  the  market  for  electronic 
security (and fire) equipment. With the major players focused on products and systems that 
can  be  marketed  worldwide,  there  remain  many  niche  markets  that  are  very  attractive  for 
SMEs,  either  directly  or  through  the  supply  of  specialized  products  and  components  to 
major manufacturers and integrators, and to the installation service market. 

7.2.2. Value chain 

Consolidation  and  internationalisation  within  the  electronic  security  products  sector  has 
promoted  the  shift  of  hardware  production  to  Asia;  firstly  Hong  Kong  and  Taiwan,  with 
China  now  having  a  dominant  position.  All  the  major  players  now  have  (contract) 
manufacturing facilities in China, which allows them to reduce labour/production costs. By 

117

118

119

120

For additional background information on the airport security screening equipment sector the SECERCA study. 
GE Security, another market leader was acquired by UTC in 2010. 
An important motivation for these major companies was that the belief that security/fire equipment markets are relatively stable 
and not as cyclical and other markets for their products 
An important share of EU fire detectors – mainly automation devices - are made by Siemens in Switzerland. 

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contrast, significant activities connected to the related software systems are still undertaken 
globally.121   

By and large, while the major players may still be manufacturers – albeit that they contract 
Asian manufacturers to supply of products and sub-systems under ‘private labels’ – the main 
focus of their activities is on systems integration. Other companies, which include most of 
those  in  the  EU,  are  more  focussed  on  ‘services’,  including  research  and  innovation  to 
develop new high-tech products and product customisation for specialised ‘high end’ market 
segments.122  

In terms of the factors shaping competitiveness, it is relevant to note that security equipment 
is not only characterised by its sophistication but also by its reliability. Accordingly, having 
the newest technology can be a less important issue than reliability. As a result, in order for 
technology  developments  to  be  adopted  in  the  market,  they  often  need  to  be  tied  to 
functionality improvements in equipment/systems. At the same time, the electronic security 
products  sector  in  general  has  been  characterised  by  increasing  customer  requirements  for 
integrated  security  solutions,  both  for  security  products  and  accompanying  services.  This 
implies that competitiveness of suppliers places less emphasis on performance of individual 
product categories and more on the supply and integration of a system of products. 

121

122

Software development which remains a ‘global’ activity is of particular relevance for surveillance systems. Eventually, more 
development  of  ‘soft’  components  is  expected  to  move  towards  the  sites  for  hardware  production,  particularly  with  the 
increasing integration of intelligent systems within surveillance cameras themselves. This development may be accelerated by a 
skills shortage in software development (e.g. signal analysis) within the EU. 
EU companies are also specialising in the following fields or niche markets: perimeter security; interface (e.g. locks); signalling 
(e.g. sirens); alarm transmission; and wireless equipment. 

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Figure 2  Stylised supply/value chain for electronic security equipment (alarm systems etc.) 

7.2.3. Competitive position of EU industry 

International  trade  data123  indicates  a  strong  development  of  the  position  of  European 
suppliers  in  the  international  market  for  intruder  and  fire  alarms.  Over  the  past  decade, 
growth  in  the  value  of  EU  exports  of  for  intruder  and  fire  alarms  significantly  outstripped 
that of imports, such that the EU moved from a negative trade balance to record a positive 
trade balance in 2008 and 2009 of $US 51.5 million and $US 110.5 million respectively (see 
Table 1 and Figure 3).  

Further,  the  EU  has  been  successful  in  increasing  its  share  in  the  value  of  world  trade  of 
intruder  and  fire  alarms,  which  is  shown  to  have  grown  markedly  from  2005  onwards124. 

123

124

The  analysis  reported  in  this  section  is  based  on  trade  data  is  taken  from  UN  COMTRADE  database.  All  data  refer  to  the 
product code 853110 (HS2002 and HS2007) ‘Burglar or fire alarms and similar apparatus’. 
For the analysis of aggregate world trade, the estimates are based on reported imports (‘mirror’ export data) rather than export 
data. For data concerning the EU, the total value of reported EU exports is closely in line with the total value of imports from 
the  EU  reported  by  receiving  countries.  The  main  observed  difference  between  the  value  reported  exports  and  the  value  of 
recorded imports relates to China. Specifically, the total value of reported exports from China is significantly lower than the 
total value of imports reported as coming from China by receiving countries. This is particularly the case for the earlier years 
covered  by  the  analysis.  Notwithstanding  the  difference  between  reported  export  and  import  data,  the  general  pattern  in  the 
evolution of country shares in total world trade are similar whichever approach is used 

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The  data  indicate  that  the  share  of  imports  originating  from  the  EU  in  the  value  of  total 
world  imports  of  burglar  and  fire  alarms  increased  from  less  than  20%  in  2002  to  nearly 
35% in 2009; though this share appears to have fallen back in 2010. By contrast the share of 
the USA has steadily declined over the period (see Figure 4).  

Table 1  EU external trade in burglar and fire alarms: total value ($US million) 

Total extra-EU exports 

Total extra-EU imports 

Trade Balance 

Year 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

217.4 

256.0 

304.0 

314.7 

378.0 

497.3 

660.1 

665.3 

599.1 

355.6 

398.0 

453.3 

497.5 

576.5 

579.9 

608.6 

554.8 

602.0 

Figure 3  EU external trade in burglar and fire alarms: total value ($US million) 

700

600

500

400

300

200

100

0

2002 2003 2004 2005 2006 2007 2008 2009 2010

-138.2 

-142.1 

-149.3 

-182.8 

-198.5 

-82.6 

51.5 

110.5 

-2.9 

Total Imports

Total Exports

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Figure 4  Shares of global trade in burglar and fire alarms: share of world imports by source county (%) 

40%

35%

30%

25%

20%

15%

10%

5%

0%

European Union

China

United States

Israel

Canada

Switzerland

Japan

2002 2003 2004 2005 2006 2007 2008 2009 2010

The  EU’s  successful  export  performance  is  also  reflected  in  the  development  of  the  EU’s 
revealed  competitive  advantage  (RCA)  index  for  burglar  and  fire  alarms,  which  indicates 
that the EU has moved from a revealed competitive disadvantage prior to 2007 to a revealed 
competitive advantage thereafter (see Figure 5). 

Revealed Comparative Advantage (RCA) 

The RCA of a county is defined as follow:  

‘The  RCA  index  of  country  I  for  product  j  is  measured  by  the  product’s  share  in  the 
country’s exports in relation to its share in world trade: 

RCAij = (xij/Xit) / (xwj/Xwt) 

Where  xij  and  xwj  are  the  values  of  country  i’s  exports  of  product  j  and  world  exports  of 
product j and where Xit and Xwt refer to the country’s total exports and world total exports. 
A value of less than unity implies that the country has a revealed comparative disadvantage 
in the product. Similarly, if the index exceeds unity, the country is said to have a revealed 
comparative advantage in the product’ (WITS, 2011) 

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Figure 5  EU Revealed Competitive Advantage (RCA) index for burglar and fire alarms 

The main markets for EU exports are the USA and the Russian Federation, together with the 
near  neighbours  of  Switzerland  and  Norway  (see  Figure  6).  Beyond  these  countries,  EU 
exports  are  characterised  by  a  wide  geographical  spread  with,  it  appears,  an  increasing 
importance  of  the  Middle  East,  North  Africa  and  a  number  of  Asian  markets  (including 
China). These markets, together with Latin America, are expected to be the main drivers of 
growth  in  global  demand,  particularly  given  growth  expectations  for  Europe  and  other 
developed markets and a probable slump in new construction demand. 

Figure 6  Extra-EU exports of burglar and fire alarms by destination ($US million) 

700

600

500

400

300

200

100

0
2002 2003 2004 2005 2006 2007 2008 2009 2010

Other

Saudi Arabia

Singapore

Turkey

UAE

China

Libya

Norway

Switzerland

Russian Fed.

United States

The  main  supplier  of  EU  imports  of  burglar  and  fire  alarms  is  (mainland)  China,  which 
increased its share of EU imports from 21.7% in 2002 to 40% in 2010125 (see Figure 7 and 

125

It should be noted that the recorded value of total EU imports of burglar and fire alarms exceeds the sum of recorded values of 
EU imports from individual (source) countries. The difference between these values is treated as non-specified (N.S). Estimated 
country shares are based on the share in the sum of recorded values recorded by source country. 

EN 

92 

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Figure 8). A further 7% for imports originating from Hong Kong may be added to this figure, 
indicating that nearly half of EU imports of burglar and fire alarms come from China. With 
the exception of Israel, most of the other main suppliers to the EU market have seen their 
share of total EU imports fall between 2002 and 2010.  

China’s position of the main supplier to the EU reflects its role as the dominant location for 
the  basic  manufacturer  of  alarms,  with  the  major  global  players  operating  (contract) 
manufacturing facilities in the country. In this respect, imports of alarm products from China 
and  other  low-cost  Asian  suppliers  can  be  viewed  primarily  as  inputs  into  the  production 
processes  of  European  and  other  ‘advanced’  country  suppliers,  as  opposed  to  imports  that 
are  directly  competing  with  locally  manufactured  products.  This  is  also  indicated  by  the 
difference in the relative ‘price’ (unit value) of Chinese imports which approaches a tenth of 
the ‘price’ of products from the EU and other ‘advanced’ country suppliers (see Table 2). 

Table 2  Estimated average unit value of imports by source country 

Country 

Canada 

Switzerland 

European Union 

Israel 

United States 

Japan 

Hong Kong, China 

China 

Unit value  ($US – average for 2009 to 2010) 

54.6 

52.6 

37.7 

32.9 

30.6 

8.0 

4.1 

3.9 

EN 

93 

   EN 

 
 
Figure 7  Extra-EU imports of burglar and fire alarms by source country ($US million) 

Figure 8  Extra-EU import shares of leading supplier countries of burglar and fire alarms (% of imports) 

A further feature of the development of EU trade in burglar and fire alarms is the increase in 
the  relative  importance  of  extra-EU  trade  vis-à-vis  trade  within  the  EU.  Intra-EU  trade, 
which  was  worth  in  excess  $US  1.1  billion  in  2010,  remains  significantly  higher  than  EU 
external trade at approximately $US 600 million in the same year. However, growth in extra 
EU exports has tended to significantly outstrip growth in intra-EU trade. Prior to the onset of 
the  financial  and  economic  crisis,  which  appears  to  have  significantly  dampened  trade 
growth  in  2009  and  2009,  extra-EU  exports  of  fire  and  burglar  alarms  grew  at  an  average 
annual rate of 20% (CAGR)126 compared to 11% for intra-EU exports. Consequently, over 
this  period  the  ratio  of  intra-EU  exports  to  extra-EU  exports  fell  from  3.7  to  2.3  (i.e.  the 
value of internal trade within the EU was 3.7 times that of EU exports in 2002 compared to 

126

Compound annual growth rate 

EN 

94 

   EN 

 
 
 
                                                 
 
only  2.3  times  in  2008).  This  trend  was  reinforced  in  2009  and  2010,  where  the  ratio  of 
intra-EU exports to extra-EU exports fell to 1.8 (i.e. the value of extra-EU exports rose to 
more than half the value of intra-EU trade). 

To the extent that intra-EU trade provides an indicator of the underlying growth of demand 
for  burglar  and  fire  alarms  within  the  EU,  the  relatively  slow  growth  in  intra-EU  trade 
compared  to  extra-EU  exports  suggests  that  the  ability  of  the  EU  burglar  and  fire  alarm 
producers  to  maintain  and  enhance  their  international  competitiveness  will  be  of  crucial 
importance for the sectors future growth performance. 

7.2.4. The EU industry's regulatory handicap 

European Standards (EN) already exist for several product categories of electronic security 
and fire protection equipment.127 Moreover, a limited number of security-related equipment 
(e.g.  fire  alarm  and  fire  protection  equipment)  are  covered  within  the  scope  of  the 
Construction  Product  Directive/Regulation  and,  thus,  fall  with  the  provisions  for  mutual 
recognition  of  certificates  of  compliance  with  EU  regulations.  Otherwise,  for  other 
categories  of  electronic  security  products  including  specifically  intruder  alarms,  the  EU 
market is characterised by national schemes for conformity assessment and certification. For 
these  product  categories,  there  has  been  very  little  progress  towards  common  certification 
schemes  and/or  mutual  recognition  of  certificates.  Consequently,  suppliers  have  to  submit 
their  products  to  national  conformity  assessment  and  procedures,  which  may  also  require 
adapting products to country-specific requirements. This situation imposes costs higher costs 
on industry that would otherwise  be  the  case  if  a  common  EU-wide  system  and/or  mutual 
recognition across countries was in operation. 

Illustration: Costs of Conformity assessment and certification of alarm systems 

Currently  a  producer  of  a  security  alarm  system  seeking  to  supply  their  product 
throughout  the  EU  will  typically  need  to  apply  for  10-15  certificates  from  different 
Member States. The costs of certification of an alarm system are on average (with a large 
spread depending on the nature of the product) at the level of EUR 200-300 thousand for 
full access to Europe including all tests. Stakeholders indicate that the estimated cost for 
obtaining  a  mutually  recognised certificate  for  the  same  alarm  system  would  amount  to 
EUR 40-60k. 

7.2.5. Competitiveness implications of the envisaged policy initiatives 

•  The impact of harmonized standards, conformity assessment and certification. For the 
intruder and fire alarms segment, the development of EU-wide harmonised standards and 
certification  procedures  is  expected  to  be  the  most  important  element  of  the  proposed 
policy  actions.  For  suppliers  serving  multiple  national  markets  in  the  EU,  EU  wide 
standards and certification procedures should reduce costs of demonstrating compliance 
with  market  requirements.128,  Common  EU-wide  standards  should  also  reduce  cost 

127

128

For example: EN54 series for fire alarm systems and components;  EN50131 series standards for intrusion and hold-up alarm 
system  components;  EN50132  series  standards  for  CCTV  systems  and  components;  EN50133  series  standards  for  access 
control systems and components. 
See  Section  7.2  (Quantitative  Comparison  of  the  Options)  and/or  Annex  4  (Background  to  quantitative  analysis  of 
certification). For suppliers serving single national markets costs should be unchanged ceteris paribus; although, to the extent 

EN 

95 

   EN 

 
                                                 
 
 
incurred  to  adapt  products  to  comply  with  differing  national  product  standards  and 
national  conformity  assessment  procedures.  Removing 
the  need  for  multiple 
certifications  should  enable  suppliers  to  more  rapidly  access  different  parts  of  the  EU 
market  which,  in  turn,  may  have  implications  for  the  organisation  and  scale  of 
production  activities.  Increasing  potential  market  size  for  products,  reducing  time  to 
market and, hence, the risks that new innovations may be replicated by competitors are 
also factors that increase the potential return to investments in research and technology 
development.  At  the  same  time,  in  establish  EU-wide  harmonised  standards  that  these 
standards  do  not  operate  in  such  a  way  that  they  inhibit  technology  development  and 
innovation. 

To the extent that reduced conformity assessment and certification costs are passed on to 
consumers this should improve EU price competitiveness. Further, by reducing barriers 
to  market  access  for  alarm  products,  an  EU-wide  approach  should  increase  market 
openness  and  enhance  consumer  choice.  Finally,  an  EU-wide  certification  scheme 
enables  a  supplier  to  demonstrate  to  potential  customers  that  its  product  meets  all 
necessary EU performance requirements. As such it may reduce consumer ‘uncertainty’ 
over  product  performance  that  arises  as  a  result  of  existing  differences  in  national 
product and conformity assessment standards and specifications. 

The development of EU-wide harmonised standards and certification procedures should 
have a positive effect on the competitiveness position of SMEs. Conformity assessment 
and  certification  costs  represent  a  proportionately  higher  share  of  total  costs  for  SMEs 
than  for  larger  producers  with  higher  volumes  of  production/sales.  Thus  cost  savings 
from  removing  multiple  certification  requirements  will  be  proportionately  higher  for 
SMEs. Further, as the existing national systems present a greater market access barrier 
for  SMEs,  they  should  potentially  benefit  more  from  improved  market  access 
opportunities  stemming  from  an  EU-wide  approach.  Moreover,  in  so  far  as  EU 
certification  serves  as  a  recognised  mark  of  product  performance(‘quality)’  within  the 
EU market then it may reduce the importance of ‘reputation effects’ of larger players and 
established local companies, thus facilitating SMEs trade within the EU. 

•  Public  procurement  approaches  to  bridge  the  research  –  markets  gap.  Public 
procurement  plays  only  a  limited  role  in  the  overall  market  for  intruder  and  fire  alarm 
systems. Public procurement approaches may be relevant, however, in the context of the 
integration  of  alarm  systems  (and  other  electronic  security  products)  in  larger  projects 
for  the  supply  of  integrated  security  solutions  including,  where  relevant,  provision  of 
associated  services  (e.g.  alarm  monitoring  services).  This  could  help  bridging  the  gap 
between research and markets. 

•  Civil-military synergies. Possible synergies between civilian and military applications of 
technologies  specifically  associated  to  alarm  systems  appear  to  be  limited.  There  may  be 
greater opportunities by looking more broadly to other electronic security products (cf. example 
of the Israeli industry developing civil applications of surveillance systems, perimeter security, 
access control, developed for defence purposes). 

Implications  for  the  international  competitiveness  of  the  EU  industry.  By  reducing 
market  fragmentation  the  proposed  actions  should  raise  the  EU  overall  market  efficiency 

that  the  EU  wide  approach  covers  markets  (or  market  segments)  that  are  not  currently  subject  to  certification  then  costs  of 
supplying these markets would rise. 

EN 

96 

   EN 

 
                                                                                                                                                      
and industry performance levels. However, an EU-wide approach to standards, conformity 
access  and  certification  may  also  increase  the  openness  of  the  EU  market  to  non-EU 
suppliers. In this regard, For EU companies to take advantage of enhanced access to the EU 
market  as  a  whole  may  require  also  responding  to  increased  competition  from  non-EU 
suppliers. 

The reduction in costs resulting from an EU-wide approach could have a limited (positive) 
impact on EU price competitiveness in the short term. Nonetheless, there may be dynamic 
effects as a less fragmented EU market should encourage investment in research, technology 
development  and  innovation.  An  EU-wide  certification  scheme  (and  corresponding  EU 
security performance ‘mark’ or ‘quality label’) may strengthen broader international market 
awareness  and  acceptance  of  EU  products,  to  the  extent  that  it  obtains  greater  market 
recognition than existing national certification schemes. This could provide an alternative to 
(or complement) existing national/propriety safety and quality marks (e.g. the American ‘UL 
Mark’). 

EN 

97 

   EN 

 
Annex 8: Background to quantitative analysis of certification  

This Annex contains two different analyses of the reduction of costs associated to multiple 
testing to obtain national certification for: 1. alarm systems and 2. airport scanners: 

1. Certification costs associated to alarm systems 

Illustration: Conformity assessment and certification of alarm systems. 

Currently  a  producer  of  a  security  alarm  system  seeking  to  supply  their  product 
throughout  the  EU  will  typically  need  to  apply  for  10-15  certificates  from  different 
Member States. The costs of certification of an alarm system are on average (with a large 
spread depending on the nature of the product)129 at the level of EUR 200-300 thousand 
for full access to Europe including all tests.  

With  the  introduction  of  one  common  CAC  scheme  with  mutual  recognition  of  the 
certificate  across  the  Member  States,  these  costs  of  conformity  assessment  and 
certification should be reduce significantly. Stakeholders indicate that the estimated cost 
for obtaining a mutually recognised certificate for the same alarm system would amount 
to EUR 40-60k. Compared to the current national schemes, the total savings for a single 
Type-1 product from a common EU scheme for conformity assessment and certification 
would amount to a figure in the region of EUR 160-240k. 

Information obtained from industry sources in France indicate that the annual total direct 
costs (covering initial laboratory tests, factory process  control and  certification fees) to 
manufacturers for certification of intruder alarm systems (NF & A2P certification) is in 
the  region  of  €  450  to  €  500  thousand130.  This,  however,  does  not  include  preparatory 
costs  or  additional  costs  that  may  associated  with  product  adaptations  etc.  required  to 
meet different national approval/certification requirements, which are thought to double 
overall costs for manufacturers.  

Quantification: The costs of certification and conformity assessment for producers 
in Europe: the case of intruder alarms 

Based on the industry estimate as described above, the direct costs for certification have 
been  estimated  for  France  to  be  around  EUR  500  thousand  per  year.  This  is  the  direct 
cost  for  certification,  and  the  estimate  is  that  the  company  costs  in  preparation  for 
multiple listings and in different product specifications for the different approval needs 
could  well  cost  this  amount  again.  Hence  total  costs  for  certification  and  conformity 
assessment  for  intruder  alarm  systems  are  in  the  order  of  magnitude  of  EUR  1  million 
per year for France.  

129 

130 

CAC costs vary significantly depending on the type of product and specific characteristics. There are 
also differences across countries in the fees charged for CAC. 
This  figure  relates  to  (voluntary)  certification  NF  &  A2P.  For  more  information  on  NF  &  AP2 
certification  see  the  joint  AFNOR-CNPP  document  “Certification  rules  Electronic  Security 
Equipment: 
available  at: 
HTTP://WWW.CNPP.COM/FR/MEDIATHEQUE/AUTRES-DOCUMENTS/CERTIFIER-
IMAGE/H58/REFERENTIEL-NF324-H58-VERSION-ANGLAISE-OCTOBRE-2010.  

Intrusion  Detection,  Access  Control  Management  Systems” 

EN 

98 

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Our estimate of the total market for intruder alarm systems is around EUR 1.1 billion in 
2010.  However,  there  is  no  information  available  how  this  is  distributed  over  member 
states. It is assumed therefore that this value for France as indicated above is replicated 
across Europe and is roughly in line with the GDP. Given a share of France of 16% of 
EU  economy,  then  this  would  suggest  a  total  cost  for  producers  in  Europe  of  around 
EUR 6.2 million per year for certification and conformity assessment of intruder alarms.  

Estimates from other sectors, suggest that the cost associated to differences in technical 
rules  and  multiple  testing/certification  are  between  2%  to  10%  of  production  costs131. 
This  is  an  estimate  for  different  products  outside  the  security  sector,  and  has  been 
applied in the Commission’s impact assessment for the New Legislative Framework132. 
The  same  impact  assessment  indicates  that  in  2002  43%  of  enterprises  in  the  area  of 
burglar alarm systems have encountered problems with mutual recognition. From these 
sources it is unclear what costs are precisely included in the range of 2%-10%. 

Therefore, in order to be conservative, the lower bound of the estimate is taken for this 
study of 2% of production costs. It is also not clear what proportion of the total market of 
intruder  alarm  systems  of  EUR  1.1  billion  is  covered  by  products/systems  that  require 
certification. If one assumes that 75% of the market is covered by certified products, this 
would give a market value of EUR 825 million.133 At 2%, this would suggest a cost to 
the industry of EUR 13.2 million, where production costs have been taken at 80% of the 
total relevant market value of EUR 825 million. 

Estimated cost savings 

The total costs for certification and conformity assessment of intruder alarm systems is 
thus estimated to range between EUR 6.2 million and EUR 13.2 million per year. These 
costs cannot be reduced completely. After all, there is still need for a single certification 
and  conformity  assessment,  and  associated  need  for  testing  etc.  It  is  assumed  that  a 
single  EU  system  reduces  the  cost  associated  to  differences  in  technical  rules  and 
multiple  testing/certification  by  three-quarters  (75%).  This  would  suggest  a  saving  of 
EUR 4.7 million to EUR 9.9 million per year. 

2. Certification costs associated to airport scanners 

Illustration: Conformity assessment and certification of screening equipment 

It  was  not  possible  to  obtain  detailed  information  on  the  (direct)  costs  of  testing  for 
airport scanners. An industry source has indicated, for example, that the cost of a single 
test of an Explosive Detection System (EDS) could be in the region of €65 thousand and 
for  a  liquid  explosive  system  (LAGS)  the  figure  may  vary  from  €30  to  €75  thousand; 
these  figures  relate  to  a  single  test  procedure  and  do  not  take  into  account  any  repeat 

131 
Fabienne  Ilzkovitz,  Adriaan  Dierx,  Viktoria  Kovacs  and  Nuno  Sousa,  «  Steps  towards  a  deeper 
economic  integration:  the  internal  market  in  the  21st  century  “,  European  Economy,  Economic  Papers,  No. 
271. January 2007. European Commission. 
132 
European Commission, 2007, Impact assessment on Directive laying down procedures relating to the 
application  of  certain  national  technical  rules  to  products  lawfully  marketed  in  another  Member  State  and 
repealing Decision 3052/95/EC, SEC(2007) 112/2. 
133 
services, based upon data from EURALARM. 

The  75%  certification  coverage  of  the  alarm  systems  market  is  an  estimation  of  the  Commission 

EN 

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testing that may be required. The aforementioned products are relatively small systems 
and costs associated for larger systems are reputed to be significantly higher and may run 
into several hundred thousand Euro; for example, an amount of €100 thousand has been 
indicated for an ‘imaging test’ for a cargo scanner while a figure of €500 thousand has 
been  indicated  for  the  cost  of  the  certification  process  for  a  biometric  identity  card 
model. 

Quantification: The costs of certification and conformity assessment for producers 
in Europe: the case of airport scanners 

In  order  to  quantify  the  effect  regarding  the  costs  of  certification  and  conformity 
assessment for producers of airport scanners and screening equipment, the first question 
is  how  many  certification  and  conformity  assessment  procedures  are  currently  carried 
out  per  year.  There  is  limited  information  available  on  that  subject.  From  statistics 
available it can be derived that there are at least on average some 20 certifications and 
approvals of this type of equipment per year.  

However, this reflects only the awarded certifications and/ approvals, but does not reflect 
those  products  that  did  not  get  a  certification  or  approval,  and  needed  multiple  re-
iterations  of  the  process.  Furthermore,  it  is  the  certification  and  approval  outcome  of 
only two entities (DGAC and ECAC) in Europe. Therefore, it may be assumed that the 
annual number of airport scanning and screening products that go into a certification and 
approval procedure is higher than the 20 mentioned before. A conservative assumption 
would be 30 products, which is used in this study. In reality this could be even higher.  

As  the  market  size  for  airport  scanners  and  screening  equipment  differs  per  country, 
producers will not offer all 30 products for a certification / approval procedure in each of 
the  27  Members  States.  After  all,  some  small Member  States  with  only  1  or  2  airports 
will  not  purchase  equipment  every  year,  and  therefore  producers  will  not  or  very 
limitedly  enter  a  certification  or  approval  procedure  for  new  products  if  they  don’t 
expect to sell their products in short term. Apart from that, some countries don’t have a 
formal  certification  or  approval  system,  but  would  rely  on  certification  or  approval  of 
other member states or ECAC, perhaps with some minor testing of the equipment before 
implementation.  

On  the  other  hand  there  are  Member  States  with  a  large  airport  scanner  and  screening 
equipment  market  with  a  more  rigorous  certification  and  approval  procedure,  under 
which  all  30  products  may  be  expected  to  be  offered  for  certification  or  approval  on 
average per year. Finally, there is a category of countries in between these two ends of 
the  spectrum  sketched  above,  with  a  medium  sized  market  for  airport  scanning  and 
equipment  products  and  a  certification  and  some  approval  regime  that  thus  does  not 
address  all  30  products  every  year.  Based  on  this  the  27  Member  States  have  been 
allocated to three categories, which is presented in the following table.  

Category 

Airport 
scanner  market 
size 

1 

Large 

Member states 

Certification  and 
approval regime 

Number 
countries 

of 

DE,  ES,  FR,  IT, 
UK 

Full  certification 
and  approval  of 
all scanners 

5 

EN 

100 

   EN 

 
2 

3 

Medium 

Small 

AT, BG, EL, FI, 
HU,  NL,  PL, 
RO, SE 

Some certification 
and  approval  half 
of the scanner 

BE,  CY,  CZ, 
DK, EE, IE, LT, 
LV,  LU,  MT, 
PT, SI, SK 

Limited 
and 
certification 
approval  of  few 
scanners 

9 

13 

27 

Subsequently, the certification and approval regimes have been further defined. For category 
1,  full  certification  and  approval  of  all  scanners,  it  is  assumed  that  thus  100%  of  the  30 
scanners will be certified and approved each year. For category 2, it is assumed that this is 
50%, and for category 3 10% is adopted. Furthermore, as outlined above, there may be some 
variation of the costs of a certification, as this is strongly dependent on the product type. A 
range from EUR 35 thousand, via EUR 65 thousands, and EUR 100 thousand to even EUR 
500 thousand has been mentioned by industry for the certification of a product.  

The  EUR100  thousand  relates  to  a  scanner  and  this  value  has  therefore  been  taken  in  the 
quantification as a proxy for the costs for a full certification and approval, applying for the 
five countries in category 1. It has been assumed that the certification and approval process 
is relatively more light in category 2, and therefore costs have been determined at 50% of 
the  full  certification  costs,  hence  at  EUR  50  thousand.  Finally,  costs  for  certification  and 
approval  in  category  countries  have  been  taken  as  10%  of  the  full  value,  hence  EUR  10 
thousand.  

In this latter category it is anticipated that authorities in these countries would heavily rely 
on  the  certification  and  approval  of  products  by  large  Member  States,  and  would  require 
themselves  only  some  limited  testing.  Based  on  these  assumptions,  the  annual  costs  for 
certification  and  approval  of  airport  scanner  and  screening  equipment  in  Europe  has  been 
estimated at EUR 22 million, which is further detailed in the table below.  

Category 

Number 

of 

Number 

of 

Number 

of 

Costs 

of 

Totals costs 

countries 

certifications 

certifications 

certification 

&  approvals 

&  approvals 

and  approval 

per  year,  per 

per  year, 

in 

for producers 

country 

Europe 

Maximum  annual  number  of 

30 

products 

for  certification  and 

approval 

1 

2 

3 

Total 

5 

9 

13 

27 

Estimated cost savings 

30 

15 

3 

150 

145 

39 

334 

EUR 100K 

EUR 15 M 

EUR 50K 

EUR 6.75 M 

EUR 10K 

EUR 0.39 M 

EUR 22.14 M 

A  harmonisation  of  the  certification  and  conformity  assessment  procedures  for  airport 
scanners would prevent all duplications at national level, which allows for considerable cost 
savings. The cost for certification and conformity assessment would thus amount to EUR 3 

EN 

101 

   EN 

 
 
 
 
 
 
 
 
 
 
million  (30  products  *  EUR  100  thousand).  This  implies  that  the  impact  of  the 
harmonisation  in  terms  of  reduction  of  costs  for  certification  and  conformity  assessment 
would amount to approximately EUR 19 million per year. 

EN 

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Annex 9: Background to quantitative analysis of PCP 

The idea is to evaluate the impact that a European PCP programme comparable to the US 
SBIR  programme  could  have  on  the  European  security  industry.  We  have  seen  that  R&D 
support  schemes  such  as  SBIR  or  PCP  have  a  strong  impact  on  growth  of  sales  and 
employment,  through  more  innovation  coming  into  the  market,  which  increases  the 
competitiveness of the industry. 

Thus it is reasonable to suppose that in the event of the EU implementing an efficient PCP 
scheme  in  the  security  field,  the  competitiveness  and  consequently  the  growth  of  the 
European security industry would be greater than in the event of the EU not doing so. 

This  could  be  translated  in  terms  of  a  differential  of  growth  for  the  European  security 
industry over the next five years. With no PCP scheme, European industry will lose market 
shares to its competitors, whereas if a PCP scheme is implemented European industry may 
on the contrary gain market shares, or at the very least maintain its position. 

There  appears  to  be  a  reasonable  consensus  that  the  overall  size  of  the  world  security 
equipment  market  has  a  value  of  approximately  €100  billion,  with  an  industry  employing 
about 2 million people. 

By geographical region, North America (mainly the US) is widely recognised as having the 
largest security market, with most available data sources indicating a current market share of 
around 40% or more. Europe is ranked 2nd in the global security market, with a market 
share ranging approximately between 25% and 35%. Although the recent financial crisis 
could  imply  a  slowing  of  growth  in  2009-2010,  global  demand  for  security  equipment  is 
expected  to  grow  at  around  5%  annually  through  the  coming  years.  Strongest  gains  are 
expected  to  occur  in  the  less  developed  markets  of  Asia,  Africa/Middle  East  and  Latin 
America.  The  European  market  should  grow  faster  than  the  American  market,  as  it  is  still 
relatively undersized. 

Estimating the possible impact of a PCP scheme 

Implementation  of  a  PCP  scheme  should  improve  the  competitiveness  of  the  European 
security  industry  on  European  and  world  markets.  Compared  to  a  no-PCP  situation,  this 
should lead to faster growth of the European security industry. 

With no PCP scheme, security industry growth in Europe until 2016 should be around 5% per 
year, close to the world average. The studies mentioned above show that companies receiving 
R&D support through SBIR or PCP programmes grow faster than the others. But there is no 
easy  way  to  quantify  the  increase  in  growth  for  the  whole  industry  caused  by  this  faster 
growth  of  recipient  companies.  However  we  have  attempted  to  show  what  the  effect  of  an 
increased  growth  rate  could  be  on  the  sales  and  employment  of  the  European  security 
industry. 

A  tentative  assumption  of  a  1%  increase  in  the  annual  growth  rate  due  to  R&D  support 
through  a  PCP  scheme  would  lead  to  extra  sales  of  2  billion  €  compared  to  the  baseline 
situation, and to an increase in employment of 40 000. The employment figure is based on 
the world employment of 2 million in 2009, projected assuming a constant sales/employment 
ratio. The calculations in the table below detail the possible evolution from 2012 to 2020, 
given that the first results of the use of PCP/POV schemes in EU security research cannot be 

EN 

103 

   EN 

 
 
expected  earlier.  It  should  be  noted  that  these  are  conservative  estimations  based  on  the 
results of the US SBIR programme. 

Possible impact of a PCP scheme on the European security industry 

2012 

Prevision on the 2020 
market value without the 
use of PCP schemes 

Prevision on the 2020 
market value with the use 
of PCP schemes 

PCP 
impact 

European security market 
value (billion €) 

European security industry 
production (billion €) 

European security industry 
employment (thousands) 

European security service 
employment (equipment 
related) (thousands) 

17 

22.7 

140 

283 

growth  
(in %) 
3.5 

2.6 

2.6 

3.5 

Projected market 
value in 2020 

23 

28 

172 

372 

growth  
(in %) 
4.5 

4.5 

4.5 

4.5 

Projected market 
value in 2020 

25 

33 

203 

406 

+ 2 

+ 5 

+ 31 

+ 34 

A brief overview on the effects of the US SBIR programme on growth and employment can 
be fund in the two tables below. 

Metin  Ege  in  his  thesis  on  “How  do  grants  influence  firm  performance?  An  econometric 
evaluation of the SBIR programmes at NIH” (2009) compared two samples of data, a test and 
a control one in order to check the effect of the SBIR programme on the average sales growth 
for  the  NIH  projects  for  three,  five  and  eight  years.  The  results  demonstrated  at  1  % 
significance level that the average sales growth was higher in the groups of Phase II awardees 
than the non-recipients group. The following figure shows that the sales growth of the SBIR 
firms reaches 18, 13 and 8 % in three, five and eight years respectively. At the same time, the 
non-SBIR firms demonstrated a growth of 8, 7 and 5 %. 

Results  were  similar  when  all  recipients  (Phase  I  and  Phase  II)  were  compared  to  all  non-
recipient applicants. 

EN 

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source Metin Ege 

Metin  Ege  in  compared  two  samples  of  data  in  the  same  way  as  described  above  for  sales 
growth to check the effect of the SBIR programme on the average employment growth for 
the NIH projects for three, five and eight years. The results demonstrated at 1 % significance 
level that the average employment growth was higher in the groups of Phase II awardees than 
the  nonrecipients  group.  The  following  figure  shows  that  the  employment  growth  of  the 
SBIR firms reaches 16, 15 and 10 % in three, five and eight years respectively. At the same 
time, the non-SBIR firms demonstrated a growth of 6, 4.4 and 4 %. 

source Metin Ege 

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Annex 10: Background to quantitative analysis of Civ-Mil Synergies  

All data are based on the Civil Military Synergies Study. 

The four following fields were analysed on their potential for civilian military synergies: 

Infrared cameras 

• 
•  C4I (Command, Control, Computers and Intelligence) 
•  Radio-communications 

1. Infrared cameras 

Infrared  cameras  were  developed  for  the  military.  Civil  markets  will  have  more  than 
doubled the military market by 2020.  

Basically two technologies, both originated with the military: 

• 

• 

Cooled sensor camera, for high performance, and long range 

Uncooled sensor cameras, for lower performance 

It  is  thought  that  considerable  further  market  development  could  come  if  cooled  sensor 
prices  could  be  cut.  With  the  proper  investment  in  R&D,  cooled  sensor  prices  could  be 
reduced by a factor 2 or 3, and that this would enable a tenfold increase in the market.  

2. Command, Control, Computers and Intelligence - C4I  

C4I  is  a  wholly  dual  domain.  They  are  a  particular  field  within  the  data  processing  and 
communications sector, centred on a particular application which originated in the military 
field  using  civilian  technologies.  It  extends  to  security  for  similar  needs,  functions, 
equipment and software. 

Quantifying the relative share of military and security is difficult, as the systems are more or 
less the same, and even the personnel involved are the same. The only way to differentiate 
the two is by the nature of the customer (military or security). 

The  applications  differ  however.  Border  security  for  example  is  very  similar  to  military 
applications,  whereas  police,  or  fire-fighting  are  more  decentralised,  and  use  less 
sophisticated equipment. 

The customer attitude is also different. The military have ambitious specifications, but they 
can  accept  a  system  that  is  not  perfect  at  the  start,  but  that  will  evolve  and  adapt.  The 
civilian  security  market  on  the  other  hand  will  only  accept  a  system  that  is  perfectly 
operational right from the start. 

A third, important, difference is in the field of standards. In the military market the NATO 
standards are used all over Europe. In the civilian security market there are no standards yet. 
The main question is developing common exchange protocol standards. 

Thus it would probably be useful to harmonise civilian C4I needs, and maybe to attempt to 
transpose  the  NATO  standards,  and  to  this  end  to  integrate  the  military  into  the  civilian 
security work groups. This is not done yet at the European level. 

EN 

106 

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3. Radio-communications 

Basically this sector is driven by civil technologies. PMR (Professional Mobile Radio) and 
CNR (Combat Network Radio) are tailored for specific security or military applications and 
constraints,  but  they  use  technologies  developed  for  the  general  civil  mobile  telephony 
markets, and this will continue in the future. 

The specific military need could be no more than 20%, in the total PMR-CNR segment. But 
this result would need to be organised, with common work on standards and specifications. 
In particular it will be necessary to consider military needs in the present phase of civil R&D 
so that the technologies developed can also be used by the military.  

After the present peak in military demand due to renewal, the civil security market should be 
the driver (after 2015). 

Assessing the impacts of the three segments 

The examples we have looked at show several types of impact on the European industry. In 
the long term there seem to be cycles where civil and military markets or technologies are 
alternately the driving force and governed by these cycles, markets and activities fluctuate 
and change. This is in particular the case in radio-communications.  

In the shorter term, and looking forward from today, civil-military synergies either open new 
civil markets to products developed for the military (infrared cameras), or they enable scale-
effect  cost  reduction  by  the  military  using  civil  technologies  (radio-communications),  or 
they enable development of systems that are specific to the security and military fields (C4I). 

This is of course a very simplified view, focusing on the more immediate economic results 
measured on levels of activity and employment. 

Table 1 Military-civil synergy impact on activity in examples studied 
Spin-off generates additional civil markets 

Infrared cameras 

Market +>30% of which security +10% up to today 

Duality generates civil markets to relay military programme completion 

Radio-communications  Dual market, uses civil technologies 

C4I 

Civil market growth will relay military market growth after 2015 
New dual market; 
Military market could drop by 2020, civil market needed to relay 
growth  

The  following  table  attempts  to  quantify  the  examples.  These  figures  are  rough  estimates, 
designed  to  give  orders  of  magnitude  rather  than  precise  indications.  Moreover  the  civil 
markets  given  are  not  only  security  markets,  they  sometimes  include  some  industrial  or 
commercial applications, or even, in the case of infrared cameras, automotive applications. 
At this stage it is not possible to provide a final analysis. 

At  this  stage  we  considered  that  all  market  growth  up  to  2020  could  be  ascribed  to  the 
benefits of duality. This is of course only partly true, as there could be some growth from 
market size increase in the absence of any duality. However, in the examples chosen, duality 
is  at  the  heart  of  growth  through  spin-offs  generating  new  markets  (in  these  cases  mostly 
civil, but also military in the case of radio-communications). 

EN 

107 

   EN 

 
Table  2  Estimations  on  the  possible  benefits  through  the  exploitation  of  civil  military 
synergies  

Civil Military 
synergies 

Increase in sales 

Added employments 

Defence and 
Security 

Only Security 

Defence and 
Security 

Only 
Security 

Infrared cameras 

EUR 450 million 

EUR 440 million 

2.800 

2.750 

C4I 

EUR 300 million 

EUR 900 million 

1.875 

5.625 

Radio Communication  EUR 1.000 million 

Total 

EUR 1.7 billion 

EUR 1.500 
million 

EUR 2.840 
billion 

-3.125 

9.375 

1550 

17.750 

  Table 3 Market evolution in the 4 sectors covered, 2010-2020.(million €) 

World 

Europe  

IR cameras mil 
IR cameras civ 
IR cameras total 

C4I mil 
C4I civ 
C4I total 

Radio-comms mil 
Radio-comms civ 
Radio-comms total 

All examples mil 

All examples civ 

All examples total 

2010 

2600 
1100 
3700 

5800 

1000 

6800 

2300 
7900 
10200 

10700 

10000 

20700 

2020 

2800 
3300 
6100 

3500 

4000 

7500 

3800 
9900 
13700 

10100 

17200 

27300 

2010 

530 
220 
750 

1700 

300 

2000 

1500 
1000 
2500 

3730 

1520 

5250 

2020 

540 
660 
1200 

1100 

1200 

2300 

1000 
2500 
3500 

2640 

4360 

7000 

(Source: Study on Civ-Mil Synergies: 
HTTP://EC.EUROPA.EU/ENTERPRISE/POLICIES/SECURITY/DOCUMENTS/INDEX_EN.HTM#H2-3 ) 

The  examples  considered  only  represent  a  small  part  of  the  security  and  military  markets 
(around  5%).  A  number  of  other  synergy  domains  exist,  and  will  be  studied  later  on.  But 
with only these four examples dual synergies and market growth with no additional action 
should bring an increase in employment, not counting services, of nearly 3% by 2020. 

EN 

108 

   EN 

 
  
  
  
  
  
  
Annex 11: Initial list of EU wide standards for security 

Committee 

Reference 

Title 

CEN Committees 

CEN/TC 169 - Light and lighting 

EN 15193:2007 

Energy  performance  of  buildings  -  Energy 
requirements for lighting 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

CEN/TC 
-  Personal 
electronic 
identification, 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

224 

-  Personal 
CEN/TC 
identification, 
electronic 
signature  and  cards  and  their 
related systems and operations 

EN 726-1:1994 

EN 726-2:1995 

EN 1387:1996 

EN 726-7:1999 

EN 1546-2:1999 

EN 1546-3:1999 

EN 1332-5:2006 

EN 15320:2007 

EN 1332-1:2009 

card 

- 
systems 
Identification 
Telecommunications 
integrated  circuit(s) 
cards  and  terminals  -  Part  1:  Systems 
overview 

card 

- 
systems 
Identification 
Telecommunications 
integrated  circuit(s) 
cards  and  terminals  -  Part  2:  Security 
framework 

Machine  readable  cards  -  Health  care 
General 
applications 
characteristics 

Cards: 

- 

card 

Identification 
- 
systems 
integrated  circuit(s) 
Telecommunications 
cards  and  terminals  -  Part  7:  Security 
module 

Identification  card  systems  -  Inter-sector 
electronic  purse 
-  Part  2:  Security 
architecture 

Identification  card  systems  -  Inter-sector 
electronic  purse  -  Part  3:  Data  elements 
and interchanges 

Identification card systems - Man-machine 
interface  -  Part  5:  Raised  tactile  symbols 
for  differenciation  of  application  on  ID-1 
cards 

-  Surface 
Identification  card  systems 
transport  applications 
Interoperable 
Public Transport Applications - Framework 

- 

Identification  card  systems 
interface 
machine 
principles for the user interface 

-  Human-
-  Part  1:  Design 

EN 

109 

   EN 

 
 
247 

CEN/TC 
Automation, 
Building Management 

- 
Controls 

Building 
and 

in  building 
Open  data  communication 
controls 
building 
and 
automation, 
management 
-  Home  and  building 
electronic  system  -  Part  1:  Product  and 
system requirements 

EN 13321-1:2006 

CEN/TC 
informatics 

CEN/TC 
informatics 

CEN/TC 
informatics 

CEN/TC 
informatics 

CEN/TC 
informatics 

251 

- 

Health 

ISO 

EN 
5:2008 

21549-

Health  informatics  -  Patient  healthcard 
data  -  Part  5:  Identification  data  (ISO 
21549-5:2008) 

251 

- 

Health 

ISO 

EN 
8:2010 

21549-

Health  informatics  -  Patient  healthcard 
data - Part 8: Links (ISO 21549-8:2010) 

251 

- 

Health 

EN ISO 27799:2008 

Health  informatics  -  Information  security 
management 
ISO/IEC 
27002 (ISO 27799:2008) 

in  health  using 

251 

- 

Health 

EN 13606-4:2007 

Health 
record communication - Part 4: Security 

-  Electronic  health 

informatics 

251 

- 

Health 

ISO 

EN 
6:2008 

21549-

Health  informatics  -  Patient  healthcard 
data  -  Part  6:  Administrative  data  (ISO 
21549-6:2008) 

CEN/TC 
informatics 

251 

- 

Health 

ISO 

EN 
5:2010 

13606-

informatics 

Health 
-  Electronic  health 
record  communication  -  Part  5:  Interface 
specification (ISO 13606-5:2010) 

CEN/TC 263 - Secure storage of 
cash, valuables and data media 

EN 
1300:2004+A1:2011 

Secure  storage  units  -  Classification  for 
high  security 
their 
resistance to unauthorized opening 

locks  according 

to 

CEN/TC  278  -  Road  transport 
and traffic telematics 

EN 12834:2003 

Road  transport  and  traffic  telematics  - 
Dedicated  Short  Range  Communication 
(DSRC) - DSRC application layer 

CEN/TC  278  -  Road  transport 
and traffic telematics 

EN ISO 14816:2005 

CEN/TC  278  -  Road  transport 
and traffic telematics 

ISO 

EN 
1:2007 

24014-

Road  transport  and  traffic  telematics  - 
Automatic 
equipment 
-  Numbering  and  data 
identification 
structure (ISO 14816:2005) 

vehicle 

and 

transport 

Public 
fare 
- 
management system - Part 1: Architecture 
(ISO 24014-1:2007) 

Interoperable 

CEN/TC  278  -  Road  transport 
and traffic telematics 

EN 15509:2007 

Road  transport  and  traffic  telematics  - 
Electronic  fee  collection  -  Interoperability 
application profile for DSRC 

CEN/TC  278  -  Road  transport 
and traffic telematics 

ISO 

EN 
4:2010 

24534-

and 

vehicle 

equipment 
Automatic 
identification 
-  Electronic  Registration 
Identification  (ERI)  for  vehicles  -  Part  4: 
Secure 
using 
communications 
asymmetrical 
(ISO  24534-
4:2010) 

techniques 

- 

EN 15602:2008 

Security service providers - Terminology 

EN 

110 

   EN 

 
384 

Project 
CEN/TC 
Committee - Airport and aviation 
security services 

- 

EN 16082:2011 

Airport and aviation security services 

CENELEC Committees 

CLC/TC  9X  -  Electrical  and 
electronic 
for 
railways 

applications 

EN 50126-1:1999 

CLC/SC  9XA  -  Electrical  and 
electronic 
for 
railways 

applications 

EN 50159:2010 

CLC/SR 56 - Dependability 

EN 61907:2010 

CLC/TC  57  -  Power  systems 
management  and  associated 
information exchange 

EN 61850-7-2:2010 

CLC/TC 79 - Alarm systems 

EN 50130-4:1995 

CLC/TC 79 - Alarm systems 

EN 
4:1995/A1:1998 

50130-

CLC/TC 79 - Alarm systems 

EN 
4:1995/A2:2003 

50130-

CLC/TC 79 - Alarm systems 

EN 50130-5:1998 

CLC/TC 79 - Alarm systems 

EN 50131-2-3:2008 

CLC/TC 79 - Alarm systems 

EN 50131-2-4:2008 

CLC/TC 79 - Alarm systems 

EN 50131-2-5:2008 

demonstration 

Railway  applications  -  The  specification 
and 
Reliability, 
Availability,  Maintainability  and  Safety 
(RAMS)  -  Part  1:  Basic  requirements  and 
generic process 

of 

Railway  applications  -  Communication, 
- 
signalling  and  processing  systems 
Safety-related 
in 
transmission systems 

communication 

Communication 
engineering 

network 

dependability 

Communication  networks  and  systems  for 
power  utility  automation  -  Part  7-2:  Basic 
information  and  communication  structure  - 
Abstract  communication  service  interface 
(ACSI) 

Alarm  systems  -  Part  4:  Electromagnetic 
compatibility  -  Product  family  standard: 
Immunity  requirements  for  components  of 
fire, intruder and social alarm systems 

Alarm  systems  -  Part  4:  Electromagnetic 
compatibility  -  Product  family  standard: 
Immunity  requirements  for  components  of 
fire, intruder and social alarm systems 

Alarm  systems  -  Part  4:  Electromagnetic 
compatibility  -  Product  family  standard: 
Immunity  requirements  for  components  of 
fire, intruder and social alarm systems 

Alarm systems - Part 5: Environmental test 
methods 

Alarm  systems  -  Intrusion  and  hold-up 
systems  -  Part  2-3:  Requirements 
for 
microwave detectors 

Alarm  systems  -  Intrusion  and  hold-up 
systems  -  Part  2-4:  Requirements 
for 
combined  passive  infrared  and  microwave 
detectors 

Alarm  systems  -  Intrusion  and  hold-up 
systems  -  Part  2-5:  Requirements 
for 
combined  passive  infrared  and  ultrasonic 
detectors 

EN 

111 

   EN 

 
CLC/TC 79 - Alarm systems 

EN 50131-2-6:2008 

CLC/TC 79 - Alarm systems 

EN 50131-3:2009 

CLC/TC 79 - Alarm systems 

EN 50131-4:2009 

CLC/TC 79 - Alarm systems 

EN 50131-6:2008 

CLC/TC 79 - Alarm systems 

EN 50131-8:2009 

CLC/TC 79 - Alarm systems 

EN 50132-1:2010 

CLC/TC 79 - Alarm systems 

EN 50132-5:2001 

CLC/TC 79 - Alarm systems 

EN 50132-7:1996 

CLC/TC 79 - Alarm systems 

EN 50133-1:1996 

Alarm  systems  -  Intrusion  and  hold-up 
systems  -  Part  2-6:  Opening  contacts 
(magnetic) 

Alarm  systems  -  Intrusion  and  hold-up 
systems  -  Part  3:  Control  and  indicating 
equipment 

Alarm  systems  -  Intrusion  and  hold-up 
systems - Part 4: Warning devices 

Alarm  systems  -  Intrusion  and  hold-up 
systems - Part 6: Power supplies 

Alarm  systems  -  Intrusion  and  hold-up 
systems 
fog 
device/systems 

8:  Security 

-  Part 

Alarm  systems 
-  CCTV  surveillance 
systems  for  use  in  security  applications  - 
Part 1: System requirements 

Alarm  systems 
-  CCTV  surveillance 
systems  for  use  in  security  applications  - 
Part 5: Video transmission 

Alarm  systems 
-  CCTV  surveillance 
systems  for  use  in  security  applications  - 
Part 7: Application guidelines 

Alarm  systems  -  Access  control  systems 
for  use  in  security  applications  -  Part  1: 
System requirements 

CLC/TC 79 - Alarm systems 

EN 
1:1996/A1:2002 

50133-

Alarm  systems  -  Access  control  systems 
for  use  in  security  applications  -  Part  1: 
System requirements 

CLC/TC 79 - Alarm systems 

EN 50133-2-1:2000 

CLC/TC 79 - Alarm systems 

EN 50133-7:1999 

CLC/TC 79 - Alarm systems 

EN 50136-1-1:1998 

CLC/TC 79 - Alarm systems 

EN 
1:1998/A1:2001 

50136-1-

Alarm  systems  -  Access  control  systems 
for  use  in  security  applications  -  Part  2-1: 
General requirements for components 

Alarm  systems  -  Access  control  systems 
for  use  in  security  applications  -  Part  7: 
Application guidelines 

-  Alarm 

Alarm  systems 
transmission 
systems and equipment - Part 1-1: General 
requirements 
transmission 
for  alarm 
systems 

-  Alarm 

transmission 
Alarm  systems 
systems and equipment - Part 1-1: General 
requirements 
transmission 
for  alarm 
systems 

EN 

112 

   EN 

 
CLC/TC 79 - Alarm systems 

EN 
1:1998/A2:2008 

50136-1-

CLC/TC 79 - Alarm systems 

EN 50486:2008 

-  Alarm 

transmission 
Alarm  systems 
systems and equipment - Part 1-1: General 
requirements 
transmission 
for  alarm 
systems 

Equipment for use in audio and video door-
entry systems 

CLC/TC 79 - Alarm systems 

EN 50518-1:2010 

ETSI Committees 

Monitoring  and  alarm  receiving  centre  - 
Part 
construction 
requirements 

Location 

and 

1: 

ITS/WG 2 - Intelligent Transport 
systems 

EN 302 665 

Intelligent 
Communications Architecture 

Transport 

systems; 

EN 302 409 

EN 302 403 

EN 301 829 

EN 301 828 

Broadcast 

EN 301 790 

EN 301 132 

Digital  cellular  telecommunications  system 
(Phase 
(GSM);
2+) 
Specification  of  the  Cordless  Telephony 
System Subscriber Identity Module for both 
Fixed Part and Mobile Station 

Digital  cellular  telecommunications  system 
(Phase 
(GSM);
2+) 
GSM  Cordless  Telephony  System  (CTS), 
Phase 
1;
Service  description;  Stage  1  (GSM  02.56 
version 7.2.1 Release 1998) 

Integrated  Services  Network 

Private 
(PISN); 
Inter-exchange 
Wireless 
terminal 
supplementary  service 
(2003), modified] 

signalling 

protocol;
authentication 
[ISO/IEC  15433 

Integrated  Services  Network 

Private 
(PISN); 
and 
Specification, 
flows;
information 
Wireless 
authentication 
supplementary  services  [ISO/IEC  15432 
(1999) modified] 

functional  model 

terminal 

Video 

Digital 
(DVB);
Interaction  channel  for  satellite  distribution 
systems 

Broadcasting 

Integrated  Services  Digital  Network 
(ISDN); 
tools 
Security 
telecommunication services 

for  use  within 

(SET) 

EN 

113 

   EN 

 
  
  
  
  
  
Integrated  Services  Digital  Network 
(ISDN); 
Security  tools  (SET)  procedures;  Digital 
Subscriber  Signalling  System  No.  one 
protocol;
(DSS1) 
Part 1: Protocol specification 

Integrated  Services  Digital  Network 
(ISDN); 
Security  tools  (SET)  procedures;  Digital 
Subscriber  Signalling  System  No.  one 
protocol;
(DSS1) 
Part 
Implementation 
Conformance  Statement  (PICS)  proforma 
specification 

Protocol 

2: 

radio 

link  equipment 

(TM);
Transmission  and  Multiplexing 
the 
Fixed 
transmission  of  analogue  video  signals 
operating  in  the  frequency  bands  24,25 
GHz  to  29,50  GHz  and  31,0  GHz  to  31,8 
GHz 

for 

EN 301 002-1 

EN 301 002-2 

EN 300 396-4 

TETRA 06 

EN 300 396-6 

Terrestrial  Trunked  Radio 
Direct 
Operation 
Mode 
Part 6: Security 

(TETRA);
(DMO);

EN 

114 

   EN 

 
  
  
  
 
 
General Annexes: 

Tables: 

1.  Summary table: Main competitors 

2.  Breakdown US security industry market 

3.  Breakdown US security industry market (public and private involvement) 

4.  Overview top 10 US security companies (2008) 

5.  Overview of market characteristics for specific equipment segments 

6.  Overview of market characteristics for specific equipment segments (continued) 

7.  SWOT analysis of the European Security Industry 

8.  SWOT analysis of the European Security Industry (continued) 

9.  Overview of supply chain characteristics for specific equipment segment 

10. Overview of supply chain characteristics for specific equipment segment (continued) 

11. Number of annual certifications for aviation security products 

12. Executive summary of the "European Security Research and Innovation Forum" 

Figures: 

13. Figure 1: Public-private involvement in 'traditional' and 'new' security markets 

14. Figure 2: Characterisation of security equipment supply and demand 

15. Figure 3: Overview of the security market: supply and demand characterisation 

16. Figure  4:  Europe's  technological  performance  compared  with  North  America  and 

Asia 

17. Figure 5: EU Patent shares 2000-2009 

18. Figure  6:  General  Framework:  Security  Regulation,  Conformity  Assessment  and 

Certification 

19. Figure 7: Overview of ECAC Common Evaluation Process 

20. Figure 8: Security ‘products’: specified requirements and conformity assessment 

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Table1 Summary table: Main competitors 

OVERVIEW ANALYSIS OF MAIN COUNTRY COMPETITORS 

Country 
Region 

/ 

Market 
size 

of 

% 
global 
market  

Remarks  

EU  

≥ € 26 bn 

25.2% 

•  Estimation of EU-turnover is € 26-36.5 bn.  

•  World’s largest market, strongly  influenced by US regulations and 

US federal security policy.  

•  US security agenda (9/11, war on terror/drugs) and federal security 

US 

€ 42 bn 

40.8% 

budgets are main drivers.  

•  US  companies  have  strong  competitive  position,  are  often 
frontrunners in high-end security equipment and active around the 

globe. 

•  Estimation refers to turnover for 2006, high growth expectations.  

•  Economic  growth,  massive  construction  projects  and  public 

demand are main drivers for growth. 

China  

€ 13.5 bn 

13.1% 

•  Traditional physical security protection is largest sector.  

Japan 

€ 3.8 bn 

3.7% 

•  Chinese  companies  mainly  produce  low-end  equipment  for  home 
market; for high-end equipment China is dependent on US and EU 

companies.  

•  Estimation refers to turnover for 2008; estimation for total security 
industry  is  €  8.3  bn  (data  for  2005,  including  security  services); 

high growth potential.  

•  High crime rates (also IT-related) are main drivers for growth.  

•  Advanced 

(physical) 

security 

protection,  with 

sensors, 

image/monitoring, access control, being the main markets.  

•  Japanese companies have strong position in IT security; focus on 

home market, but also export to Russia, China, Us and EU.  

•  National security is (political) top priority, due to terrorist threats. 

•  Homeland  security  industry  is  an  important  ‘spin  off’  from  the 

strong military and defence industry.  

Israel 

€ 2.7 bn 

2.6% 

•  Israeli  companies  have  strong  position 
telecommunication and software technology.  

in  high-tech 

IT, 

•  Government budgets, but also military training (IT-related) and US 

military aid are important factors for competitive position.  

•  Security equipment is an important export product, e.g. to EU.  

•  Estimation refers to turnover for 2006; estimation for total security 
industry  is  €  4.5  bn  (data  for  2006,  including  security  services), 

with high growth rates expected. 

Russia 

€ 1.1 bn 

1.1% 

•  Traditional physical security protection, including CCTV and video 

surveillance, is the largest sector.  

•  Russian market players mainly focus on home market and produce 

low-end equipment.  

Rest 

of 

the world 

€ 13.9 bn 

13.5% 

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TOTAL 

€ 103 bn 

100% 

Source: ECORYS based on different sources 

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Table 2: Breakdown US security industry market 

US SECURITY INDUSTRY – Sectors 

Sectors 

Aviation security 

Maritime security 

Border security 

Critical infrastructure protection 

Counter-terror intelligence 

Physical security protection* 

Protective clothing (first responders) 

TOTAL MARKET SIZE 

Market value estimate 

€ 2.5 bn 

€ 3 bn 

€ 4.5 bn 

€ 5 bn 

€ 8 bn 

€ 12.5 bn 

€ 6.5 bn 

€ 42 bn 

* It includes CCTV, access control equipment, intrusion and detection systems, etc. 

Source: SIA (2007), HSRC (2008) and ECORYS 

Table 3 

Breakdown US security industry market (public and private involvement) 

Category 

% total spending 
security 
on 
equipment 

Remarks 

US Federal 

60% 

US States and local authorities 

10% 

US  private  sector  &  quasi-

governmental 

30% 

TOTAL spending on equipment 

100% 

Source: ECORYS based on Civitas (2006) 

Intelligence  is  the  main  sub-category  of  federal 
spending  (50%);  the  main  federal  departments 
are:  Defense,  Justice,  Health  and  Human 
Services, State, Agriculture and Energy.  

Approximately  ±€3  billion  is  funded  from  federal 

programmes,  often  related  to  the  Department  of 

Home Security (DHS). 

The  protection  of  critical  infrastructure  -often 

owned  by  the  private  sector  (70-80%)  -  is  the 

main  component  within  this  category  (energy 

utility,  airports,  harbours).  Spending  is  mainly 

related to the type of industry and regulation.  

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Table 4: 

Overview top 10 US security companies (2008) 

(Parent) 
company 

Contracts  value  in 
2008 ( and 2007)  

Remarks 

Boeing Co. 

€ 402 m 

Boeing  is  active  in  the  commercial  airplanes  market,  but 

(€ 193 m) 

Boeing Integrated Defence Systems (with 70,000 employees) 

also provides high-tech security solutions (like military aircrafts 

and  sophisticated  IT  solutions).  In  2008  they  won  a  $2  bn 

contract regarding border protection.  

Lockheed  Martin 

€ 331 m 

A  ‘security  and  information  technology  company’,  although 

Corp. 

(€ 345 m) 

58%  of  their  turnover  is  related  to  the  US  defence  market.  In 

relation  to  homeland  security  they  develop  and  produce 

equipment for border security, critical infrastructure protection, 

emergency  management  & 

response, 

information  and 

transportation  security.  Their  workforce  reaches  146,000 

employees.  

IBM Corp. 

€ 330 m (€ 322 m) 

Provides (among others) IT-infrastructure (security) solutions. 

Accenture 

€ 267 m (€ 140 m) 

Provides (among others) IT-infrastructure (security) solutions.  

General  Dynamics 

€ 266 m 

GD  (92,000  employees)  is  active  in  aerospace,  combat  & 

Corp. 

marine  systems  and  ‘information  systems  and  technology’ 

(€ 136 m) 

(e.g. tactical and strategic mission systems).  

SAIC 

€ 247 m 

Provides  mainly  technical  services  and  products  related  to 

(€ 215 m) 

employ 45,000 people. 

security  (defence,  homeland  security,  energy,  etc.).  They 

Unisys Corp. 

€ 233 m (€ 230 m) 

Provides IT-solutions for ‘mission-critical environments’. 

L3- 

€ 221 m 

Originally a defence company; in relation to homeland security 

Communications 

Holdings 

(€ 255 m) 

they offer aviation, port, maritime and cargo security solutions 

as  well  as  security  products  for  mass  transportation  and 

intrusion  detection. 

It  also  offers  services 

for  crisis 

management  and  law  enforcement  and  provides  vehicles  for 

first responders; 66,000 employees. 

Northrop 

€ 213 m 

A  ‘security  company’  (120,000  employees)  which  is  active  in 

Grumman Corp. 

aerospace, electronics, information systems, shipbuilding and 

(€ 326 m) 

technical services.  

Computer 

€ 143 m 

A  ‘consulting,  systems  integration  and  outsourcing  company’, 

Sciences Corp. 

which offer IT related security solutions.  

TOTAL top 10 

(€ 93 m) 

€ 2,652 m 

(€ 2,257m) 

Source: Government Executive, Top 25 Homeland Security Contractors 2008 and 2009; company websites. 

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Table 5: 

Overview of market characteristics for specific equipment segments 

OVERVIEW ANALYSIS BY EQUIPMENT MARKET SEGMENT 

Aviation security 

Maritime security 

CBRNE 

Analysed 

equipment 

segment 

Air cargo security 

Tracking  and 
devices 

tracing 

Detection  and  tracing  of 
CBRNE substances 

Demand  and  market 

trends 

Market 

structure 

(supply) 

Supply  position  of  EU 

industry 

Competitiveness 

assessment 

Demand is mainly driven 
by  terrorism  and  related 
regulatory  requirements. 
Overall  demand  also 
influenced  by  economic 
conditions  (i.e.  volume 
transported). 
of  cargo 
adequate 
Obtaining 
capabilities 
detection 
with 
(effectiveness) 
throughput 
required 
is  a  key 
(efficiency) 
technology driver. 

Supply  of  equipment 
concentrated  among  a 
international 
few 
players. 
Limited 
of 
upstream  suppliers  of 
sophisticated 
components / equipment 
sub-systems 

number 

demand 
Underlying 
based  on  supply  chain 
and 
monitoring 
optimisation. 
Increased 
demand is driven by the 
protection  of  the  supply 
chain 
terrorism, 
illegal  transportation  of 
goods  as  well  as  from 
new  security  policies 
and 
to 
legislation 
maritime 
increase 
security.  

from 

diverse 
Relatively 
suppliers 
equipment 
(reflecting main shipping 
More 
nations). 
in  data 
concentration 
management 
and 
systems integration. 

scene. 

Strong EU leaders in the 
global 
EU 
position 
also 
strengthened  by  recent 
takeovers in the market. 
companies 
Lead 
maintain 
significant 
manufacturing  activities 
in 
in  Europe 
Germany and UK). 

(mainly 

Main  competition 
US, 
also 
presence of China 

from 
increasing 

position 

Strong 
of 
leading  EU  companies 
(and 
technology 
development) but limited 
depth  of  EU  capabilities 
main 
beyond 
players. 

the 

EU 
position 
handicapped  by  market 
(e.g. 
fragmentation 
security 
national 
standards 
regulations, 
and 
procurement 
systems). 

Relatively  strong  EU 
position worldwide in the 
supply of new integrated 
systems (i.e. LRIT).  

for 

data 
Market 
management 
systems 
and  tracking  devices  is 
dominated 
US 
companies.  

by 

Strong  added  value  of 
the  EU  industry  in  new 
integrated  systems  but 
remaining 
of 
outsourcing  production 
and 
outside 
Europe.  

threat 

R&D 

EU  position  can  also  be 
increased 
hindered  by 
new 
to 
due 
costs 
regulations 
and 
solutions. 

Demand is mainly driven 
by  terrorism  and  related 
regulatory  requirements. 
Key  demand  segments 
include  airports,  critical 
infrastructures, 
high 
profile facilities, etc.  

Supply  of  equipment 
concentrated  among  a 
international 
few 
players. 
Limited 
of 
upstream  suppliers  of 
sophisticated 
components / equipment 
sub-systems 

number 

Strong  EU  leader  in  the 
EU 
global  market. 
position 
also 
strengthened  by  recent 
takeovers. 

 Majority  of  companies 
this  market 
active 
segment  are  based  in 
the US.  

in 

the 

Fragmented EU industry 
in 
of 
coordinated policies and 
inter-industry standards.  

absence 

companies 
European 
increasingly 
are 
supplying  outside 
the 
EU  (e.g.  Asia.  Middle 
East) but market access 
(biggest 
to 
market) 
be 
problematic. 

the  US 

can 

EU market position 

strong 

EU 
Some 
companies  among 
the 
leading  global  players 
but otherwise weak 

Some  relatively  strong 
EU  global  players  but 
potential threat from low 
cost 
as 
competitors 
technologies mature 

strong 

EU 
Some 
companies  among 
the 
leading  global  players 
but otherwise weak 

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Table 6: 
(continued) 

Overview  of  market  characteristics  for  specific  equipment  segments 

OVERVIEW ANALYSIS BY EQUIPMENT TECHNOLOGY SEGMENT 

Biometrics 

Secure 
Communications  

Protective clothing  

Analysed 
segment 

equipment 

Demand  and  market 
trends 

Market 
structure 

(supply) 

Supply  position  of  EU 
industry 

Competitiveness 
assessment 

control 

Large  scale  /  High-end 
biometric  solutions 
for 
access 
and 
identification 
is  driven  by 
Demand 
increased 
security 
needs in both public and 
commercial markets.  
in  societal 
Differences 
influence 
acceptance 
and 
overall 
utilisation. 
technology 
The 
seems 
characterised  by  lower 
acceptance  of  biometric 
technologies 
the 
US. 

demand 

than 

EU 

leading 

High  end  segments  are 
concentrated  among  a 
few 
global 
suppliers.    Component 
supply  structure  is  more 
but  mainly 
diverse 
European, 
or 
Japanese 

US 

in 

(with 

Majority  of  suppliers  are 
localised 
the  US 
in 
(largest market) with the 
European  supply  chain 
having few (but relevant) 
players  in  the  high-end 
solutions 
biometric 
segment 
EU 
companies  accounting 
for 50% of global market 
high-end 
share 
solutions),  as  well  as 
SMEs 
and  mid-size 
players  in  Germany  and 
UK. 
EU  market  fragmented 
and  fragile,  due  to  lack 
of  specific 
regulation 
and  standardisation  at 
EU 
foster 
demand. 
US  regulatory  initiatives, 
certification 
and 
standard  bodies  have 
become 
world 
references  for  the  entire 
industry. 

level 

to 

Large 
government 
communication systems 

Protective  clothing 
first responders 

for 

is  driven  by 
Demand 
large 
requirements  of 
governmental 
systems 
(police  forces,  etc.),  as 
well  as  by  a  ‘technology 
push’ 
and 
model 
standardisation.  
is 
The  PMR  market 
by 
highly 
structures 
national 
(centralised  market 
in 
France  vs  decentralised 
market in US). 

influenced 

High-end 
segments 
characterised  by  limited 
number  of  players;  but 
wider  range  for  low  end 
applications. 
Large 
systems 
integrators 
have 
involvement 
increased 
through  acquisition  of 
activities 
PMR 
mainstream 
telecom 
equipment suppliers. 

are 
players 
EU 
exclusively  competing  in 
the high-end segment of 
the  PMR  market,  with 
worldwide  leadership  in 
high-end  governmental 
applications. 
US  is  the  global  world 
across 
leader 
commercial 
and 
governmental 
applications. 
Possible  challenge  from 
low-cost 
(Asian) 
competitors. 

adequate 
An 
standardisation 
policy 
and  homogenisation  of 
national  markets  would 
permit  the  EU  to  remain 
strongly  competitive  due 
to 
its  already  good 
position  and  leadership 
in  mobile  and  secure 
communications. 

mainly 

Underlying 
demand 
driven by number of first 
personnel; 
responder 
a 
implies 
‘replacement 
market’ 
limited  demand 
with 
Fragmented 
growth. 
demand  side  due 
to 
risks  and 
variety  of 
multiple 
purchasing 
public entities.  

range 

Presence  of  a 
large 
players 
of 
number 
(garments),  serving  a 
diverse 
of 
industries  and  services. 
Companies are normally 
niche 
focusing 
markets. 
Upstream 
fabrics) 
concentrated. 

(fibres  and 
more 

on 

to 

connection 

Differing  position  of  EU 
companies  in  the  global 
market  depending  on 
their  level  in  the  supply 
chain. 
Most  fibres  produced  by 
global 
chemical 
companies  with  limited 
direct 
to 
security. 
Fabric  and  garments 
fairly 
tend 
be 
localised  with 
limited 
international 
competition. 
Strong  global  position  in 
the  fabric  and  garment 
EU 
market, 
companies 
being 
innovative. 
However,  EU  market  for 
very 
garments 
fragmented.  EU  high-
end  quality  companies 
may  be  threatened  by 
illegal  copying  from  the 
Far East. 

with 

is 

EU market position 

EU  is  home  to  leading 
EU  players  in  the  global 
scene,  but  US  remains 
the dominant market 

Relatively 
(leadership 
and 
communications) 

strong 
in  mobile 
secure 

Medium 

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Table 7: 

SWOT analysis of the European Security Industry 

SWOT ANALYSIS OF THE EUROPEAN SECURITY INDUSTRY & MARKET ENVIRONMENT 

Strengths 

Weaknesses 

(cid:131)  EU  companies  among  the  global  leaders  in  many  security 

(cid:131)  Limited depth of EU security industrial base. 

technology/application domains. 

(cid:131)  Increased  public  (including  EU-level)  funding  for  security-
related research, technology development and innovation. 

(cid:131)  Potential vulnerability of SME due both to high market entry 

barriers and potential international competition. 

(cid:131)  Low level of EU industry organisation and cooperation. 

(cid:131)  Low international presence and cooperation (with exception 

of a few main companies). 

(cid:131)  Low  aggregate  level  of  EU  funding  for  security-related 
research,  technology  development  and  innovation  (i.e. 
relative to USA). 

(cid:131)  Conservative  EU  approach  to  adoption  of  new  security 

technologies and solutions. 

(cid:131)  The size of the security market alone may be insufficient to 
technology 
in 
the 
offset 
development  or 
the  scale  of  production 
necessary  to  remain  competitive  in  the  production  of 
specialised components and sub-systems. 

research  and 

to  achieve 

investment 

(cid:131)  Strong  EU  position 

in  related/enabling  sectors  (e.g. 

(cid:131)  ICT (security) dominated by American and Asian players. 

aerospace, defence, space, telecoms, health). 

(cid:131)  Component supply located outside EU. 

(cid:131)  Large overall size of EU market. 

(cid:131)  Leading  EU  position  in  key  market  segments  (e.g.  civil 
security  and  emergency 
response,  border  control, 
maritime,  aviation,  land  transport,  distribution  &  logistics, 
etc.) 

(cid:131)  Variety 

of  market 

(e.g.  multicultural 
environments,  sophistication  of  end  markets,  resource 
levels and funding). 

conditions 

(cid:131)  The  relative  size  and  growth  of  the  US  market  and  the 
preference  of  national  administrations  for  local  suppliers  – 
US companies as main global leaders. 

(cid:131)  Slow growth of EU market compared to other regions. 

(cid:131)  Uncertainty  over  allocation  of  security  responsibilities  (EU 

vs. MS, public vs. private provision, civil vs. defence). 

(cid:131)  Lack  of  awareness  of  security  procurers  and  users  (e.g. 
concerning capability requirements and technology needs). 

(cid:131)  Market fragmentation issues: 

- 

- 

- 

- 

Low level of common EU approach to security issues, 
policy, and regulations; 

Lack  of  common  EU  approaches  to  procurement  of 
security systems and services; 

Lack of common EU security standards; 

Lack  of  common  EU  infrastructure  for  approvals, 
certification etc. 

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Table 8: 

SWOT analysis of the European Security Industry (continued) 

SWOT ANALYSIS OF THE EUROPEAN SECURITY INDUSTRY & MARKET ENVIRONMENT 

Opportunities 

Threats 

(cid:131)  Increased  market  requirements  for  integrated  security  solutions 
and interoperability/interconnectivity (i.e. favouring EU expertise 
in systems integration).  

(cid:131)  Low prioritisation of security within the EU, in general, and at MS 
level  (notably  government  administrations)  combined  with 
constraints on public expenditures may lead low purchase rates 
for security equipment. 

(cid:131)  Increasing  size  in  individual  security  projects  with  sufficient 
flexibility to integrate additional capabilities as new threats arise. 

(cid:131)  Increasingly  high  market  entry  barriers reduce  attractiveness of 
security markets to new entrants and discourage innovation. 

(cid:131)  New markets emerging from increasing identification needs (for 
instance,  against  fraud  or  terrorism)  and  online  security  for  e-
business will foster development of commercial applications. 

(cid:131)  Potential  exclusion  of  SMEs  from  security  market  for  large 

integrated security projects. 

(cid:131)  Increasing  sophistication  of  security  capability  requirements, 
promotes ‘high-end’ / ‘high value-added’ security equipment and 
systems solutions. 

(cid:131)  Generalisation of security equipment, systems and technologies 
promotes  price/cost-based  competition  and  favours  non-EU 
based  low-cost  suppliers,  or  results  in  relocation  of  EU-based 
production to low-cost regions. 

(cid:131)  Increasing  demand  for  automated  systems  requiring  less  (or 
more  sophisticated)  human  intervention  raises  demand  for 
security equipment and systems (relative to security personnel). 

(cid:131)  Increasing  value  added  of  security  equipment  and  systems 
generated  by  ‘soft’  elements  (software,  data  management, 
processing algorithms, etc.)  

(cid:131)  Domination  of  US  suppliers  and 

technological 
sophistication of Asian suppliers – due to larger/increasing home 
market  demand  and  support  for  R&D  and  innovation  –  raises 
their relative competitiveness vis-à-vis EU-based suppliers. 

increasing 

(cid:131)  Growing  international  (global)  markets  for  security  equipment 

and systems. 

(cid:131)  National  preferences  and  explicit  or  implicit  market  access 
barriers that restrict EU suppliers from competing in international 
markets. 

(cid:131)  Investing  in  production  facilities  in  other  regions  of  the  world, 
taking  advantage  of 
to 
maintaining  the  integrity  of  their  control  over  core  production 
processes. 

lower  production  costs,  subject 

(cid:131)  Improved  cooperation  between  regulators,  end-users,  industrial 
innovative  approaches  and 

suppliers  and 
adoption of new technological approaches.  

industry 

fosters 

(cid:131)  Adaptation  of  existing  and  new  technological  capabilities  for 
applications in the security field (e.g. nanotechnologies for PPE, 
etc.) 

(cid:131)  Economic  slowdown  and  adverse  macro-economic  conditions 

could moderate the pace of this growth to some degree. 

(cid:131)  Outsourcing  or  the  relocation  of  final  assembly  activities  to  low 

cost locations. 

(cid:131)  EU  procurers  and  users  maintain a  conservative  attitude  to  the 
adoption of new technological solutions, thus slowing down their 
take-up and implementation.  

(cid:131)  Strengthening  of 

infrastructure 

testing,  validation,  and 
optimisation  of  new  technological  concepts  for  specific  security 
domains (e.g. field-labs for first responder equipment, forensics, 
surveillance systems, etc.) stimulates product development and 
innovation. 

for 

(cid:131)  Better  IPR  enforcement,  fostering  the  interest  of  companies  to 
be involved in the development of new technologies as early as 
possible. 

(cid:131)  The  position  of  EU  high-end  quality  companies  might  be 
threatened  by  the  undermining  of  technology  investments  by 
illegal copying, etc.  

(cid:131)  Greater  EU-level  cooperation  on  development  and  adoption  of 
common security standards and approvals/certification systems. 
to  adoption  of  EU-based  standards 
Eventually 
international markets to the advantage of EU suppliers.  

leading 

(cid:131)  EU  legislation  aiming  to  develop  a  standardisation  framework 
across  all  Member  States,  which  would  be  likely  to  heighten 
overall demand for security equipment 

(cid:131)  US  dominance  of  security  supply,  creates  de  facto  US-based 

global security standards 

(cid:131)  Simpler  and  better  developed  system  for  standardisation  of 
security  systems  and  technologies  in  the  US  -  and  a  more 
focussed  stimulation  of  technological  innovation  for  security  – 
supports de facto US-based global security standards 

(cid:131)  Addressing  public  concerns  (e.g.  societal  issues)  stimulates 

innovation and creates new market opportunities.  

(cid:131)  Reduced  public  acceptance  of  security  measures  and 
intrusiveness of security systems etc. and public concerns about 
preservation of individual rights. 

(cid:131)  Additional  costs  associated  with  addressing  public  concerns 
within EU reduce cost competitiveness of EU security solutions 

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Table 9: 

Overview of supply chain characteristics for specific equipment segment 

STANDARD VALUE CHAIN 

Aviation Security 

Maritime security 

CBRNE 

Air cargo security 

Tracking and tracing devices 

Detection  and  tracing  of  CBRNE 
substances 

VALUE CHAIN 
THE 
OF 
DIFFERENT 
SEGMENTS 

Research  and 
technology 
development 

Technology  development  within 
larger equipment providers linked 
to technology expertise within the 
(or  group).  SMEs 
company 
present 
of 
developers 
as 
new/innovative  technologies  but 
presence. 
limited 
Increasing 
of 
software development as a driver 
of value added 

importance 

market 

MEDIUM CONCENTRATION 

Main  specialised  components 
be 
sub-systems  may 
and 
produced 
from 
(or 
‘in-house’ 
within  the  group).  Increasingly, 
some  OEMs  moving  away  from 
integrated  production 
vertically 
sub-
towards 
integration  of 
systems  whose  production 
is 
sub-contracted  out  to  specialised 
providers. 

MEDIUM CONCENTRATION 

Key 

components 

and 

sub-

systems 
(pre-
assembly) 

Manufacturing 
(incl. 
final 
assembly)  of 
equipment 
and systems 

(OEMs), 

Limited  number  of  equipment 
suppliers 
with 
manufacturing  activities  normally 
undertaken  ‘in-house’  and  at  the 
main  business 
locations  of 
equipment suppliers. 

HIGH CONCENTRATION  

demand 

for  more 
Growing 
integrated  systems  and  most  of 
the  larger  equipment  producers 
are  active  as  ‘integrators’.  Major 
systems  integrators  can  often  be 
primary 
when 
contractors 
CBRNE  equipment/systems  are 
required  to  be  integrated  into 
larger  systems/solutions 
(e.g. 
airports,  critical 
infrastructure, 
border control, etc.). 

HIGH CONCENTRATION 

OEMs  typically  supply  directly  to 
the market, based on their range 
of  available  products/equipment. 
The  degree  of  customisation  for 
specific  clients  is  limited.    The 
shift  towards  larger  projects  and 
more  modular 
approaches 
importance  of 
the 
increases 
systems 
an 
as 
integrators 
interface  (contractor)  with  final 
markets 

(of 

Systems 
systems) 
integration 

to 
Linkage 
final  markets 
(sales 
& 
distribution) 

Technology developments mainly 
within large companies and some 
public 
Limited 
institutions. 
innovative  SMEs, 
presence  of 
costs 
related 
of 
high 
to 
development. 
technology 
data 
focus 
Increasing 
on 
management  and 
integration 
(large  computing/data 
aspects 
management 
systems 
companies) 

MEDIUM 
TO 
CONCENTRATION 

HIGH 

Technology  has  been  developed 
for  military  purposes  and 
the 
market 
is  still 
(development) 
driven  by  military  or  homeland 
defence (and security) concerns. 

MEDIUM CONCENTRATION 

Main  specialised  components 
production  often  undertaken  ‘in-
house’ but may be outsourced to 
external  components  and  sub-
system  suppliers  based  on  the 
OEMs specifications. 

specialised 

Main 
components 
production  often  undertaken  ‘in-
house’  but  may  be  outsourced  to 
external  components  and  sub-
system  suppliers  based  on  the 
OEMs  specifications;  this  practice 
tends to be geographically limited. 

MEDIUM CONCENTRATION 

MEDIUM CONCENTRATION 

Several  medium  to  large  players 
present  in  both  LRIT  and  AIS 
(AIS  less  concentrated).  SMEs 
in 
appearing  mainly  only 
the 
tracking 
for 
market 
systems. 

vessel 

LOW 
CONCENTRATION 

TO 

MEDIUM 

Few large players  dominate data 
management 
satellite 
services. 

and 

HIGH CONCENTRATION 

integration 

Systems 
(and 
management  of  various  data 
streams)  is  essential  to  provide 
all  needed  data  at the  right  time. 
This  is  a  major  source  of  value 
added  and  is  considered  one  of 
the  most  profitable  areas  of  the 
overall supply/value chain.  

HIGH CONCENTRATION 

The  structure  of  the  distribution 
intermediaries 
channels 
and 
the  different 
differs  between 
AIS 
product 
various 
producers 
distribution 
and 
intermediaries,  while  other  types 
of  tracking  equipment  are  sold 
nearly 
the 
producers. 

types.  Many 
use 
channels 

exclusively 

by 

(OEMs), 

Limited  number  of  equipment 
with 
suppliers 
manufacturing/assembly activities. 
These  often  cover  detection  of  a 
range  of  ‘agents’  but  may  be 
specialised in specific areas 

TO 
MEDIUM 
CONCENTRATION 

HIGH 

demand 

for  more 
Growing 
integrated  systems  and  most  of 
the  larger  equipment  producers 
are  active  as  ‘integrators’.  Major 
systems  integrators  can  often  be 
primary contractors when CBRNE 
equipment/systems  are  required 
to  be 
larger 
systems/solutions  (e.g.  airports, 
critical 
border 
infrastructure, 
control, etc.).  

integrated 

into 

HIGH CONCENTRATION 

OEMs  typically  supply  directly  to 
the  market,  based  on  their  range 
of  available  products/equipment. 
The  degree  of  customisation  for 
specific clients is limited.  The shift 
towards  larger  projects  and  more 
increases 
modular  approaches 
systems 
of 
the 
importance 
integrators 
interface 
an 
as 
(contractor) with final markets 

TO 
MEDIUM 
CONCENTRATION 

HIGH 

MEDIUM 
TO 
CONCENTRATION 

HIGH 

MEDIUM CONCENTRATION 

EN 

124 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 10: 
(continued) 

VALUE CHAIN 
THE 
OF 
DIFFERENT 
SEGMENTS 

Research  and 
technology 
development 

Overview  of  supply  chain  characteristics  for  specific  equipment  segment 

STANDARD VALUE CHAIN 

Biometrics 

Secure Communications 

Protective clothing 

Large  scale 
solutions 
identification 

/  High-end  biometric
for  access  control  and

Large  government  communication 
systems 

Protective 
responders 

clothing 

for 

first 

face 

fingerprint 

Range  of  biometric  technologies 
(and 
available  but 
secondly 
recognition) 
expected  to  remain  dominant  for 
large  public  systems.  Added-value 
in  high-end  biometric  identification 
the  biometric 
in 
solutions 
engine  (focus  on  anthropometry 
and 
software).  Contrast  with 
‘commercial’  applications  where 
integration  capabilities  are  more 
important. 

lying 

technology 
Traditionally 
development 
to  military 
linked 
applications  but  increasingly  driven 
by  commercial  applications  (mobile 
communications).  Advantage  of 
the 
PMR 
encryption  of  communications  and 
the  security  of  service:  hardware 
redundancy  and  dedicated  network 
infrastructures. 

technologies 

lies 

in 

Fibres are an important technology, 
but  technology  now  allows  also 
manufacturing  companies  to  add 
‘fibre  characteristics’  to  the  fabric. 
Technology  development,  which 
technical 
requires  very  specific 
high 
expertise 
investments, 
in 
major 
fibre/chemicals 
companies. 

and 
is  concentrated 

(global) 

very 

MEDIUM CONCENTRATION 

MEDIUM CONCENTRATION 

HIGH CONCENTRATION 

Key 

components 

and 

sub-

systems 
(pre-
assembly) 

Traditionally  hardware  components 
developed  specifically  for  biometric 
increasingly 
applications.  Now, 
(i.e. 
commercial 
for 
technology 
is  used 
consumer  applications) 
based 
semiconductor 
technology. 

on 

MEDIUM CONCENTRATION 

Manufacturing 
(incl. 
final 
assembly)  of 
equipment 
and systems 

or 

to  match 

Equipment  and  sub-systems  are 
specific 
developed 
operational 
application 
the 
constraints.  Depending  on 
strategy, 
equipment 
either 
manufacturing 
delegated 
in 
electronic  equipment  industry,  or 
kept ‘in-house’ 

integrator 
can 

to  sub-contractors 

be 

components 

rely 
on 
Most 
semiconductor 
technology  with 
manufacturing  heavily  localised  in 
Asia.  

HIGH CONCENTRATION 

Electronic  board  assembly  largely 
subcontracted to dedicated players. 

MEDIUM CONCENTRATION 

components 

Specific 
(esp. 
integrated  circuits  providing  data 
encryption 
usually 
retained  ‘in-house’  by  main  PMR 
suppliers 

functions) 

For  high-end  applications,  entry 
barriers are high and the number of 
players  is  limited.  Manufacturing 
internal  or 
can  be  either  kept 
outsourced to specialists. 

HIGH CONCENTRATION 

Supply  of 
relevant (global) players. 

fibres  dominated  by 

HIGH CONCENTRATION 

Supply  of  low-end  fabrics  mainly  in 
Asia.  European  companies  have 
focussed  on  fabrics  for  high-end 
quality protective clothing. 

MEDIUM CONCENTRATION 

in 

Market 
the 
concentration 
garment  production  is  low,  both  for 
low-end  quality 
high-end  and 
products. 
often 
undertaken  by  companies  serving 
‘local’  markets  or  imported  from 
low-cost manufacturing locations 

Production 

MEDIUM CONCENTRATION 

LOW CONCENTRATION 

(of 

Systems 
systems) 
integration 

for 

System  integrators  are  the  primary 
contractors 
large  biometric 
solutions programs. Most of market 
value  (high  recurring  costs)  often 
concentrated 
these 
in  hands  of 
(major) systems integrators..  

HIGH CONCENTRATION 

Linkage 
to 
final  markets 
& 
(sales 
distribution) 

and 

systems 

integrators 
Major 
(equipment 
software 
integrators)  are  in  direct  contact 
providing 
with 
end-user, 
infrastructure 
security 
complete 
including  biometric 
identification 
systems. 

the 

integration 

System 
for  high-end 
PMR  market  (e.g.  for  serving  large 
government 
requiring 
PMR equipment to be integrated in 
or  interconnected  to  an  existing 
information system. 

systems) 

Low  level  of  systems  integration 
regarding protective clothing 

Major  systems 
different  backgrounds 
defence/aerospace, PMR) 

integrators 

(e.g. 

from 
IT, 

NOT APPLICABLE 

MEDIUM 
CONCENTRATION 

TO 

HIGH 

The  high-end  market  is  directly 
the  equipment 
addressed  by 
can 
manufacturer; 
be 
this 
contrasted  with 
low-end  PMR 
solutions  that  are  provided  by 
specialist 
a 
fragmented demand. 

distributors 

to 

End-users  have  (via  their  public 
direct 
procurement 
contact  with 
garment 
companies and there hardly seem 
to  be  any  wholesale/distribution 
market in between. 

process) 
the 

MEDIUM 
CONCENTRATION 

TO 

HIGH 

HIGH CONCENTRATION 

MEDIUM CONCENTRATION 

EN 

125 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 11: 

Number of annual certifications for aviation security products 

ECAC* 

STAC** 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

Total certifications 

14 

14 

28 

6 

1 

4 

14 

18 

3 

1 

47 

* HTTPS://WWW.ECAC-CEAC.ORG/ACTIVITIES/SECURITY/CIP_FOR_SECURITY_EQUIPMENT (these certifications have not been made by 
ECAC itself, but list only those certifications which were based on a ECAC performance standard. 

** DGAC France, Service Technique de l’aviation civile: HTTP://WWW.STAC.AVIATION-CIVILE.GOUV.FR/SURETE/TABLOCERTIMAT.PHP 

EN 

126 

   EN 

 
 
 
 
 
 
 
 
Table 12: Executive summary of the "European Security Research and Innovation Forum" 

EN 

127 

   EN 

 
 
EN 

128 

   EN 

 
 
Figures: 

Figure 1: Public-private involvement in 'traditional' and 'new' security markets 

Critical infrastructure 
protection

Aviation security 

Maritime security 

Border 
security 

Private 

Public 

Protective clothing 

Physical 
security 
protection 

This figure translates in the following numbers: 

EUROPEAN SECURITY INDUSTRY – Sectors 

Sectors 

Aviation security 

Maritime security 

Border security 

Critical infrastructure protection 

Counter-terror intelligence 

Physical security protection* 

Protective 

clothing 

(first 

responders) 

Low estimate 

High estimate 

€ 1.5 bn 

€ 1.5 bn 

€ 4.5 bn 

€ 2.5 bn 

€ 4.5 bn 

€ 10 bn 

€1.5 bn 

€ 2.5 bn 

€ 2.5 bn 

€ 5.5 bn 

€ 3.5 bn 

€ 5 bn 

€ 15 bn 

€ 2.5 bn 

TOTAL MARKET SIZE 

€ 26bn 

€ 36.5 bn 

* It includes CCTV, access control equipment, intrusion and detection systems, etc. 

Source: ECORYS 

EN 

129 

   EN 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
Figure 2 

Characterisation of security equipment supply and demand 

SUPPLY /  PRODUCTION 
CHARACTERISTICS

'New' security 
market

DEMAND / REQUIREMENT 
CHARACTERISTICS

Scale & 
complexity 
capabilities

Technology & 
'effectiveness'

Production 
efficiency

Major systems 
integrators

High-end 
(specific) market

Integration 
capabilities

Dedicated equipment 
integrators

Specialised / niche 
equipment providers

Adapted equipment 
providers

Mid-end (segmented) 
market

Customised 
solutions

Standardised 
equipment providers

Distribution 
networks

Distribution 
networks

Low-end 
(general) market

Price/cost 
competition

'Traditional' security 
market

Number of firms

Number of customers

Description: 

•  The demand-side of the market is represented as a triangle with, at the bottom, a broad base 
of  demand  for  general  ‘low-end’  security  equipment  and  systems.  This  would  cover 
standardised  products  destined  to  a  broad  base  of  customers  or  customer  segments;  typically 
this segment of the market is seen as quite price/cost-sensitive. At the top of the triangle is the 
‘high-end’ of the market, characterised by demand for specialised types of security equipment 
and systems, for which the number of customers (or customer segments) is relatively limited 
but where security ‘projects’ can be very large in terms of their individual size and can require 
high  levels  of  integration  between  different  types  of  security  applications.  In  between  the 
‘general’  and  ‘specific’  market  segments,  there  is  a  ‘mid-end’  market  with  demand  for 
customised  equipment  and  systems  providing  larger  security  capabilities  than  provided  by 
‘general’ (or ‘mass-market’) type applications but that are not as highly specific as the top-end. 

•  The supply-side of the market (security industry) is represented by the central diamond; here 

we distinguish134.  

134 It should be noted that depending on their portfolio of security products, technology expertise, and sector/market 
specialisation,  individual  companies  may  be  positioned  under  different  supplier  categories  for  different  types  of 
security equipment and systems. 

EN 

130 

   EN 

 
 
 
 
 
 
                                                 
o  ‘Standardised equipment providers’. At the bottom of the diamond – corresponding to 
supply of standardised equipment aimed at the general/mass market, production tends to 
be limited to a few major companies (see above).  

o  ‘Adapted equipment providers’. These providers typically supply products that are of a 
similar type to standardised equipment but with a greater degree of adaptation to different 
market/customer requirements (e.g. modular approaches or partial customisation). 

o  ‘Specialised  /  niche  equipment  providers’.  These  are  providers  of  specialised  and 
highly-customised  security  equipment  and  systems,  typically  for  particular  market 
segments  with  specific  sector-based  or  technology-based  requirements.  Given  the  high 
customer-specific requirements (which imply relatively small demand base for individual 
equipment/systems)  there  tend  to  be  many  suppliers  but  each  addressing  specific 
segments/niches.  Alternatively,  such  providers  may  provide  security  applications  on  the 
basis of technologies that have wider applications in other fields. 

o  ‘Dedicated  equipment  integrators’.  These  are  also  providers  of  specialised  security 
equipment  and  systems  but  typically  have  a  broader  portfolio  of  products  (or  customer 
base) than specialised providers. 

o  ‘Major  systems  integrators’.  These  are  the  major  security  systems  integrators 
responsible for coordinating the implementation of major security projects/solutions (e.g. 
systems of systems). Their main characteristic is the capability to manage large-scale and 
complex projects and they may provide only a limited part of the security equipment and 
systems themselves, but ‘buy-in’ systems from other (dedicated or specialised) providers.  

EN 

131 

   EN 

 
 
 
Figure 3: 

Overview of the security market: supply and demand characterisation 

External 
Security

Internal 
Security

Civil 
Security

Private 
Security

Defence 
(military)

Civil security 
(public / non-military)

Public infrastructure 
(public-private)

Private sector 
(private)

Defence 
Market

DEMAND

Emerging 
'New' 
Security 
Market

SUPPLY

'Traditional' 
Security 
Market

Defence 
Industry

New entrants

'Traditional' Security 
Industry

Three broad segments of the EU security market can be identified: 

•  Traditional security industry: based around the supply of general security applications (e.g. 
physical  access  control,  intrusion  and  fire  detection,  CCTV/video  surveillance,  etc.)  that 
correspond primarily to protection against ‘ordinary’ criminal activity, fire protection etc. (i.e. 
traditional security threats) but that, nonetheless, can be an integral part of overall responses to 
new security threats; 

•  Security-oriented  defence  industry:  based  on  the  utilisation  of  defence  technologies  in 
security  applications  or  through  the  acquisition  and  conversion  of  civilian  technologies  to 
security applications. These correspond primarily to protection against ‘new’ security threats; 
•  New entrants: mainly companies originating from other civilian industry and service sectors 
but some start-up companies also. They end to be based on the extension of existing (civilian) 
technologies to security applications. Protection capabilities against ‘new’ security threats may 
be  developed  out  of  more  general  capabilities  developed  for  consumer  or  private  (industry) 
sectors. 

EN 

132 

   EN 

 
 
 
 
Figure 4: Europe's technological performance compared with North America and Asia 135 

Source: 

 DG Research and Innovation 

Data: 

OECD patent database and specific studies136 

If  one  takes  a  combined  look  at  Europe's  relative  performance  in  both  science  and  technology  across 
various fields (Figure 4), one sees that it is ahead of the US in terms of both science and technology output 
in  the  field  of  aeronautics  and  space.  However,  Europe  is  weaker  than  the  US  in  the  fields  of  security, 
nanotechnology, biotechnology and ICT, as well as in health and new production technologies. 

135 For each technology field the graph shows on the X axis the global market share of Europe in terms of EPO/PCT 
patents compared with the market share of Asia (expressed as a logarithm), and the Y axis shows the market share of 
Europe  compared  with  the  market  share  of  North  America  (expressed  as  a  logarithm).  (2)  The  broad  technology 
domains are shown in bold 
136  Data  for  broad  technology  domains  taken  from  a  study  by  Research  Division  INCENTIM,  MSI,  Faculty  of 
Business & Economics, KULeuven, Università Commerciale Luigi Bocconi, KITES); Data for enabling technologies 
taken  from  "European  Competitiveness  in  Key  Enabling  Technologies"  by  Birgit  Aschhoff,  Dirk  Crass,  Katrin 
Cremers, Christoph Grimpe, Christian Rammer (ZEW, Mannheim), Felix Brandes, Fernando Diaz-Lopez, Rosalinde 
Klein Woolthuis, Michael Mayer, Carlos Montalvo (TNO, Delft), May 28th, 2010 (Study commissioned for European 
Commission DG Enterprise); All other data from OECD Patent Database. 

EN 

133 

   EN 

 
 
 
 
                                                 
When  it  comes  to  the  development  of  new  technologies,  Europe  needs  to  rise  to  the  challenge  of  global 
competition. It is relatively strong in certain more traditional fields such as automobiles, aeronautics, other 
transport and construction, where it must seek to maintain its large share of global patents (see Figure 5). 
However, in a number of technology areas Europe is behind its competitors. This is certainly true for some 
key enabling technologies: for example in nanotechnology the EU has  

28% of world patents compared with 45% for the US and 24% for Asia; in biotechnology it has 30% versus 
48% for the US and 19% for Asia; while in ICT the EU has 29% of global patents, the US 40% and Asia 
30%.  The  EU  also  lags  in  terms  of  patents  in  key  areas  for  the  future,  notably  health,  energy,  space  and 
security. 

Figure 5 "Patent shares 2000-2009: 

Patent shares 2000-2009 (PCT applications)

60%

50%

40%

30%

20%

10%

0%

Automobiles  

Aeronautics  

Food, Agriculture & Fisheries  
Other Transport  

Materials  

New Production Technologies  

Environment  

Security   
Green Energy  

Space   
Construction  

Health

Biotechnology   
Energy   

ICT  

Nanotechnology  

EU-27

North America

Asia

Data: 

EPO  PATSTAT  database  (from  a  study  by  Research  Division  INCENTIM,  MSI,  Faculty  of  Business  &  Economics,  K.U.Leuven, 
KITES)
Università 

Commerciale 

Bocconi, 

Luigi 

EN 

134 

   EN 

 
 
 
 
 
 
Figure 6: 
Certification 

General  Framework:  Security  Regulation,  Conformity  Assessment  and 

REGULATORY FRAMEWORK

Law

Regulations

Mandatory

Technical Regulations

Voluntary

Public standards

Private standards  (inc. professional  good
practice, corporate specifications etc.)

STANDARDS

Public

Private

Specified 
requirements

Standard, technical 
specification,  code of 
practice

Specified 
requirements

Supplier /  
Manufacturer

Product, Process,  
System, etc.

Procurer /  User

Supplier's 
Declaration
(1st party)

User's 
Attestation
(2nd party)

Inspection

Registration  / Audit
(Management Systems)

Certification
(3rd party)

Testing

Surveillance

CONFORMITY ASSESSMENT

Calibration 
Laboratory

Inspection 
Accreditation

Laboratory
Accreditation

Certification
Accreditation

Registrar 
Accreditation

ACCREDITATION

EN 

135 

   EN 

 
Figure 7: 

Overview of ECAC Common Evaluation Process 

EN 

136 

   EN 

 
 
 
 
 
 
 
 
 
Figure 8: 

Security ‘products’: specified requirements and conformity assessment 

Technical requirements

Compatability / 
Interoperability

Interchangability

Global system-
of-systems

Local system-of-
systems

Systems

Equipment / 
sub-system

Component / 
device

Process requirements

Conformity  assessment

Information 
exchange

2nd Party / Peer 
Review

Audit

Inspection

3rd Party / 
Certification

Replication

Testing

Ist Party

EN 

137 

EN