SAP has proposed concessions to the European Commission to address competition concerns. The German company hopes that these proposals will prevent a costly investigation.
This is according to sources at Reuters. Without an agreement, the company risks a fine of up to 10 percent of its annual global turnover. For a company the size of SAP, that could amount to several billion euros.
The exact content of SAP’s proposal is not known. Neither SAP nor the European Commission has commented on the situation.
ERP market leader in the spotlight
The European Commission has been monitoring SAP for several years due to complaints about the business practices of software suppliers. Customers complained about complex licensing terms, bundling of applications leading to higher costs, and obstacles to switching to competing suppliers.
SAP dominates the global ERP market. The company provides software that organizations use to manage their finances, human resources, supply chains, sales, and purchasing.
Broader industry challenge
In 2022, the European Commission surveyed companies about the ERP support services of both SAP and its competitor Oracle. The questions concerned the freedom to choose support from the original supplier or to switch to a competitor.
The Commission also wanted to know whether companies could easily migrate from on-premise to cloud services, and whether SAP and Oracle were trying to blacklist competitors.
Typical remedies for such problems include giving companies more flexibility in choosing service contracts and making it easier to switch to competitors.
This development highlights how large tech companies worldwide are facing growing regulatory pressure due to their market dominance and business practices.
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