The European Commission launches formal investigation into whether SAP restricts freedom of choice for ERP software maintenance and support.
SAP faces an antitrust investigation by the European Commission. The Commission confirms this in a press release. The duration of the investigation depends on factors including the complexity of the case and SAP’s level of cooperation.
The European Commission is investigating whether SAP has restricted competition in the market for maintenance and support of its on-premises ERP software in the European Economic Area. SAP’s practices allegedly limit customers’ freedom of choice and may impose unfair trading conditions.
Limited Choice
SAP requires customers to purchase maintenance and support services for all ERP licenses under the same conditions. This makes it impossible to choose different providers or pricing formulas per module, even if that could be more advantageous. According to the Commission, this prevents fair competition from external service providers, who often offer more competitive terms.
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Additionally, SAP allegedly prevents customers from discontinuing support for unused software licenses. The company is also said to systematically extend the initial duration of ERP licenses, during which customers cannot cancel support.
Finally, SAP reportedly charges high fees to customers who want to resume maintenance contracts after a ‘pause.’ In some cases, these fees equal what customers would have paid if they had never stopped.
Admissions
According to the Commission, SAP’s practices constitute an abuse of its dominant market position. This not only restricts competition but may also lead to unfair conditions for business customers in Europe.
It’s notable that for once it’s not an American but a European tech giant under scrutiny. The Commission demonstrates that the rules apply to domestic companies as well, and that Washington shouldn’t feel targeted.
SAP still has the opportunity to demonstrate goodwill and propose concrete measures. Earlier this week, the German company offered some concessions to avoid an investigation, but these failed to convince the Commission. An investigation doesn’t automatically mean sanctions, but a potential fine could reach up to ten percent of annual revenue.