SAP's software practices targeted in EU antitrust investigation

By Foo Yun Chee and Makini Brice

BRUSSELS (Reuters) -SAP's business practices may have improperly hindered its rivals, according to an EU antitrust investigation launched on Thursday, though Europe's largest software maker said it did not expect any financial impact from the probe.

The European Commission, which acts as the bloc's competition enforcer, singled out SAP's aftermarket practices for enterprise resource planning (ERP) software used by companies to manage their finances, human resources, supply chains, sales and procurement.

SAP is the world leader in the ERP sector, and the EU investigation leaves the company exposed to the risk of a fine equivalent to as much as 10% of its annual global sales.

'RESTRICTED COMPETITION' CONCERNS, COMPANY EXPECTS NO HIT

"Thousands of companies across Europe use SAP's software to run their business," EU antitrust chief Teresa Ribera said in a statement.

"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," she said.

Reuters reported on Monday that SAP had offered concessions to address EU antitrust concerns over its business practices following grievances from companies relating to its ERP software.

The company said on Thursday that it does not expect any financial hit from the EU probe.

"We do not anticipate the engagement with the European Commission to result in material impacts on our financial performance," the company said in a statement.

"However, we take the issues raised seriously and we are working closely with the EU Commission to resolve them."

The Commission said SAP may be preventing customers from switching to rival maintenance and support services for some parts of their businesses and that it prevents customers from ending these services for unused software licenses.

SAP also systematically extends the duration of the initial term of on-premises ERP licences, during which customers cannot terminate the services, the Commission said.

It also pointed to SAP's practice of charging reinstatement and back-maintenance fees to customers who resubscribe to its maintenance and support after a period of absence, with the fees corresponding to the amount customers would have paid if they had stayed with SAP.

SAP said that its policies are based on long-standing standards in the global software sector, and are in line with competition rules.

(Reporting by Makini Brice; Editing by Bart Meijer and Joe Bavier)