Exclusive-SAP offers concessions in bid to address EU antitrust concerns, sources say

By Foo Yun Chee

BRUSSELS (Reuters) -SAP, Europe's largest software maker, has offered concessions to address EU antitrust concerns related to its business practices, sources with direct knowledge of the matter said, as it seeks to stave off an investigation and potential fine.

Germany's SAP is the world leader in enterprise resource planning (ERP) software used by companies to manage their finances, human resources, supply chains, sales and procurement.

It has been on the European Commission's radar for several years after some companies voiced concerns over software vendors' complex terms and licensing conditions, bundling of applications that lead to higher costs and difficulties in switching to rival suppliers.

SAP has made a proposal to resolve regulatory concerns triggered by some of the grievances related to its ERP software, the sources said, asking not to be identified due to the sensitivity of the matter. They did not provide further details of the proposal.

EU COMMISSION LOOKS INTO SOFTWARE BUSINESS PRACTICES

If SAP can assuage the Commission, which acts as the EU competition enforcer, the company could avert an investigation and the risk of a fine of as much as 10% of its annual global sales.

Both SAP and the Commission declined to comment.

In a 2022 questionnaire sent to companies and seen by Reuters, the EU watchdog asked about SAP and U.S. tech company Oracle's ERP aftermarket support services and whether it was easy for respondents to switch to a rival vendor.

Oracle did not respond to Reuters' requests for comment.

Respondents were asked if they were free to continue their contract for support services with the original vendor or switch to a rival. They were also asked if they could freely pick and choose the support services they wanted and about any barriers they might face in doing so.

The Commission wanted to know whether it was easy for companies to migrate from an on-premise service to a cloud solution and if SAP and Oracle software vendors disparaged rivals.

Remedies to resolve such issues would typically be to allow more flexibility for companies to take service contracts for the software they want and to make it easier for them to switch to a rival.

In June, SAP asked the U.S. Supreme Court to review a decision that said it must face a lawsuit by U.S. data technology company Teradata, which accused it of violating antitrust law.

(Reporting by Foo Yun Chee; Editing by Joe Bavier)