European Commission opens formal antitrust investigation into SAP

European Commission opens formal antitrust investigation into SAP, targeting aftermarket rules for its ERP software

Brussels / Walldorf — The European Commission on Thursday opened a formal antitrust investigation into Germany’s SAP, the continent’s largest software company, probing whether the group has unlawfully restricted competition in the aftermarket for maintenance and support services tied to its flagship enterprise resource-planning (ERP) software.

In a short statement, the Commission said it was “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.” The inquiry will examine practices related to on-premises ERP licences, including whether customers are effectively prevented from switching to rival maintenance providers, whether they can terminate services for unused licences, and whether certain contract terms — such as automatic extensions and reinstatement fees — lock buyers into SAP’s ecosystem. 

The announcement is the culmination of years of scrutiny by Brussels into the commercial terms of major enterprise-software vendors and follows a recent effort by SAP to head off formal action by offering concessions to the Commission. SAP acknowledged the Commission’s move and said it would cooperate, adding that it did not expect the investigation to have a material financial impact on the company. 

What the Commission will look at

According to the Commission’s summary of concerns, the probe will focus on aftermarket practices connected to SAP’s ERP licences — a set of widely used programs that run core corporate functions such as finance, HR, procurement and supply chains. Regulators flagged several specific behaviours they will investigate: whether SAP’s rules prevent customers from choosing third-party support for parts of their operations; whether it makes it hard to terminate maintenance for software elements that customers no longer use; whether initial licence terms are being extended in ways that make early termination effectively impossible; and whether “reinstatement” or back-maintenance fees penalise customers who lapse and later want to return. Those features, the Commission said, could raise rivals’ costs and diminish choice for businesses across the European Economic Area. 

Brussels did not single out particular competitors in its announcement but noted that the inquiry follows submissions and market feedback collected over recent years from customers and smaller software and services firms about the ease of switching to rival suppliers or migrating from on-premises to cloud systems. The Commission has already canvassed industry participants in questionnaires going back to 2022. Remedies it might seek — if it finds infringements — could range from behavioural changes to binding commitments designed to increase contractual flexibility and ease switching. Failure to comply with EU competition law can expose firms to fines of up to 10% of global annual turnover. 

SAP’s response and the company’s recent approach to Brussels

SAP said in a statement that it “takes the issues raised seriously” and would work closely with the Commission, while reiterating that its policies were in line with competition rules. The company also played down any immediate financial impact, saying it “does not anticipate the engagement with the European Commission to result in material impacts on our financial performance.” 

The formal probe follows a period in which SAP attempted to resolve Brussels’ concerns without litigation. Reuters reported earlier this week that SAP had offered remedies to the Commission in a bid to head off a formal inquiry; those talks now appear to have been insufficient to remove Brussels’ concerns and the Commission has moved to a public investigation. SAP’s outreach to regulators comes against the background of a wider questioning by EU authorities of the behaviour of large software suppliers — including U.S. rivals such as Oracle — over licensing, bundling and the barriers customers face when switching providers or migrating services to the cloud. 

Market reaction and wider stakes

News of the inquiry reverberated quickly in financial markets and the technology press. European trading in SAP shares reflected investor unease, with coverage noting a modest share price decline after the announcement. Observers said the probe carries particular weight because ERP systems are often mission-critical for large corporates and public institutions; any constraints that hinder third-party maintenance, support or cloud migration can impose significant costs and lock customers into long vendor relationships. 

Beyond immediate market moves, the case touches on broader policy debates about how the EU regulates dominant technology suppliers. Competition authorities say they are concerned not only with headline market shares but with the “aftermarkets” and contractual terms that can give dominant platform or software firms durable leverage over customers and adjacent service providers. If Brussels finds abuse under Article 102 of the Treaty on the Functioning of the European Union, it could order structural or behavioural remedies and impose fines intended to deter repeat conduct. 

Voices from customers and rivals

The inquiry traces back in part to complaints and industry feedback. European user associations and some corporate customers have long pressed competition watchdogs about opaque licensing clauses, automatic renewals and difficulty in selectively purchasing support for parts of their ERP estates — issues that are especially fraught as many firms transition from on-premises installations to hybrid and cloud architectures. The Commission’s 2022 questionnaire asked companies whether it was easy to switch vendors, whether they could choose the support services they wanted, and whether migration to cloud solutions was being obstructed. 

Competitors and third-party maintenance providers that stand to benefit from greater openness have been watching closely. Some smaller support firms argue that incumbent conditioning of maintenance contracts prevents them from offering lower-cost, specialist services; software vendors and systems integrators that compete with SAP for cloud-native modules also point to the friction customers face when disentangling decades of ERP customisations. SAP and its defenders, by contrast, argue that bundled maintenance and licence terms reflect legitimate technical interdependencies, long-standing industry practices and the need to preserve security, interoperability and end-to-end service quality. 

Legal backdrop and parallel litigation

The Commission’s action comes as SAP faces other legal headwinds. In the United States, SAP is contesting litigation from Teradata that alleges anticompetitive conduct; the company earlier this year asked the U.S. Supreme Court to review a lower-court decision allowing that antitrust lawsuit to proceed. Regulators in Brussels will take a different, public enforcement path that aims to fix market-wide problems for EU customers rather than resolving private damages claims. 

What happens next

Under the EU procedure, a formal investigation gives the Commission time to gather evidence, question parties and decide whether to send a statement of objections — an early step that sets out provisional findings and gives the company an opportunity to respond. The process can take many months; the Commission also can accept binding commitments from a company at any point, which can resolve concerns more quickly if they are judged sufficient and enforceable. Brussels declined to give a deadline for the probe. 

If the Commission finds infringements, it could require SAP to change contract terms, remove barriers to switching and ensure that customers can buy third-party maintenance or select only the support services they need. Those remedies would be designed to preserve competition in the market for aftermarket support and to lower switching costs for customers, but they would also pose material business changes for SAP — which derives recurring revenue from licence-linked maintenance and an accelerating shift to subscription-style cloud sales. 

Why the case matters

For customers, the case is about choice and cost. For SAP, it strikes at the heart of a business model that has for decades blended licence sales and tied maintenance revenues — even as the company transitions toward cloud services and subscription models. For Brussels, the inquiry is another test of the Commission’s willingness to scrutinise large technology suppliers and to enforce rules that aim to keep markets contestable amid rapid digital transformation. The outcome could also influence how other software giants structure licences and aftermarket terms in Europe — and might prompt global vendors to re-think contractual templates that have become common in enterprise IT. 

— Reporting by Nick. Sources: European Commission press materials; Reuters; Bloomberg Law; Financial Times; Reuters reporting on SAP’s pre-emptive concessions.