The European Commission has launched a formal investigation into SAP’s behavior in the aftermarket for maintenance and support services in Europe.
Following a preliminary investigation, the executive branch of the European Union said there were grounds to consider whether the enterprise application behemoth may have distorted competition in the lucrative aftermarket for on-prem software support.
In a prepared statement, Teresa Ribera, EC executive vice-president for clean, just and competitive transition, said: “Thousands of companies across Europe use SAP’s software to run their business, as well as its related maintenance and support services. We are concerned that SAP may have restricted competition in this crucial aftermarket, by making it harder for rivals to compete, leaving European customers with fewer choices and higher costs.
“This is why we want to have a closer look at SAP’s potentially distortive business practices, to make sure that companies that rely on SAP’s software can freely choose the maintenance and support services that best fits their business needs.”
An SAP spokesperson said that the new proceedings are based on maintenance and support policies that follow well-worn standards that are common across the global software sector. “SAP believes that its policies and actions are fully in line with competition rules. However, we take the issues raised seriously and are working closely with the Commission to resolve them,” they said.
SAP said it did not expect its engagement with the EC would result in material impacts on its financial performance.
“As a major European player in a very dynamic global industry, SAP is committed to open competition. We trust the European Commission will aim for a quick and fair conclusion to these proceedings,” the spokesperson said.
The Commission’s concerns, resulting from the early investigation, include SAP’s requirement that customers seek maintenance and support services from SAP for all their SAP on-premises ERP software, and choose the same type of maintenance and support under the same pricing conditions for all their SAP on-premises ERP software. The EC argues that this may stop customers from “mixing and matching” services from different suppliers at different prices and support levels.
The EC also said that SAP prevents customers from terminating maintenance and support services for unused software licenses, which it argues could result in customers paying for unwanted services.
SAP also systematically extends the initial term of on-premises ERP licenses without allowing termination of maintenance and support, the EC said.
Additionally, the Commission took issue with the fact that SAP charges for reinstating maintenance deals and allegedly for back-maintenance if customers take a break from SAP support arrangements.
“In some cases, these fees correspond to the amount customers would have paid if they had stayed with SAP all along,” the EC said.
Valued at about €275 billion, SAP is the dominant supplier of enterprise software in Europe, with many of the continent’s largest manufacturers and industrial companies relying on its ERP systems. Since early 2021, it has been pushing a strategic initiative to move customers to the cloud and Software-as-a-Service. The company has said it will not offer mainstream support for widely used legacy ERP system ECC beyond 2027 and only offer extended support – at a 2 percent premium – until the end of 2030.
While third-party support is available for SAP systems, German-speaking user group DSAG said recently that users should be aware they might lose out on discounts should they wish to rejoin the vendor’s upgrade path. ®