The European Commission has opened a formal antitrust investigation into the business practices of SAP, the global market leader in enterprise resource planning (ERP) software.
Brussels officials suspect that the German tech giant may have used its dominant position to limit competition in the servicing market, which may have resulted in European companies being exposed to higher costs and less choice.
The investigation focuses on the key ERP software used by many companies to manage their finances, supply chain or human resources. Brussels has concerns that SAP may have deliberately made it difficult for customers using its local (on-premise) ERP systems to switch to external providers offering support and maintenance services.
The European Commission has identified a number of specific practices that have caused it concern:
- Blocking switching: It has been suggested that SAP may have prevented customers from opting out of maintenance services for unused licences, effectively forcing them to continue paying.
- Contract extensions: The company was to systematically extend the initial licence period, during which customers could not terminate services.
- Return fees: customers who decided to cancel the SAP service and later wanted to return to it faced ‘compensation’ fees equivalent to the amount they would have paid if they had continued their subscription without interruption.
These actions, according to the EU executive, may have artificially restricted competition and cemented SAP’s position in the secondary market of support services for its own software.
Despite the seriousness of the allegations and the risk of a financial penalty of up to 10% of the company’s annual global turnover (which, based on 2023 results, could exceed €3 billion), SAP appears to be approaching the matter with calm.
The company stated that it does not expect the investigation to have a material impact on its financial performance. At the same time, it assured that it takes the Commission’s concerns seriously and is cooperating fully with it to clarify the matter.
SAP representatives maintain that the policies in place are in line with long-standing standards in the global software industry and do not violate competition rules. It had already been reported that the company had offered some concessions to alleviate the regulator’s concerns, even before the formal initiation of proceedings. The investigation will show whether these will prove sufficient.
