The European Commission has opened a formal investigation to assess whether SAP may have distorted competition in the aftermarket for maintenance and support services related to an on-premises type of software, licensed by SAP, used for the management of companies' business operations and called Enterprise Resource Planning ('ERP'), in the European Economic Area ('EEA'). In parallel to the opening of proceedings, the Commission has adopted a Preliminary Assessment summarising the main facts of the case and identifying its competition concerns. To address the Commission's concerns, SAP may now submit commitments.
SAP is a German-based multinational corporation which develops software applications for companies to manage their business operations. This includes ERP software, which supports business functions such as managing corporate finances, human resources and project management. SAP's ERP software can be provided on-premises - when the software runs on the customer's own servers - or via the cloud - when it is hosted on SAP's servers and delivered over the internet. SAP also provides maintenance and support services for its ERP software, which include regular updates and technical assistance for its business customers to keep the software operational. Other companies also provide maintenance and support services for SAP's on-premises ERP software, in competition with SAP, often against better commercial conditions, such as price.
The Commission's preliminary investigation takes issue with the following four practices implemented by SAP in the EEA aftermarket for the maintenance and support services of SAP's on-premises ERP software, on which the Commission preliminary considers that SAP holds a dominant position:
- SAP requires customers to (i) seek maintenance and support services from SAP for all their SAP on-premises ERP software, and (ii) choose the same type of maintenance and support under the same pricing conditions for all their SAP on-premises ERP software. This may prevent customers from "mixing and matching" maintenance and support services from different suppliers at different price and support levels despite it being more convenient for them;
- SAP prevents customers from terminating maintenance and support services for unused software licences, which may result in SAP's customers paying for unwanted services;
- SAP systematically extends the duration of the initial term of on-premises ERP licences, during which termination of maintenance and support services is not possible;
- SAP charges reinstatement and back-maintenance fees to customers who subscribe to SAP's maintenance and support after a period of absence. In some cases, these fees correspond to the amount customers would have paid if they had stayed with SAP all along.
The Commission is concerned that SAP may have restricted competition from third-party providers of maintenance and support services of SAP's on-premises ERP software in the EEA. The Commission is also concerned that the practices implemented by SAP constitute exploitative conduct vis-à-vis SAP's customers that may be qualified as unfair trading conditions.
The Commission will now carry out its in-depth investigation as a matter of priority. The opening of a formal investigation does not prejudge its outcome.
Background
Article 102 of the Treaty on the Functioning of the European Union prohibits the abuse of a dominant position that may affect trade within the EU and prevent or restrict competition. The implementation of this provision is defined in Regulation 1/2003 .
A Preliminary Assessment summarises the main facts of the case and identifies the competition concerns of the Commission. To meet these concerns, the addressee of the Preliminary Assessment may offer commitments in line with Article 9(1) of Regulation 1/2003, which allows the Commission to conclude antitrust proceedings by accepting commitments offered by a company. Such a decision does not reach a conclusion as to whether there is an infringement of EU antitrust rules, but legally binds the company to respect the commitments submitted.
Article 11(6) of Regulation 1/2003 provides that the opening of proceedings by the Commission relieves the competition authorities of the Member States of their competence to apply EU competition rules to the practices concerned. Article 16(1) further provides that national courts must avoid adopting decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated.
There is no legal deadline for bringing an antitrust investigation to an end. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the companies concerned cooperate with the Commission and the parties' exercise of the rights of defense.
