Why has the European Commission decided to open formal proceedings against SAP over on-premise ERP maintenance and support policies?
SAP SE (FWB: SAP), the German enterprise software giant, has confirmed that the European Commission has opened formal antitrust proceedings into its on-premise maintenance and support service policies. The investigation, announced on September 25, 2025, seeks to establish whether SAP’s practices in the aftermarket for enterprise resource planning (ERP) software have unfairly restricted competition and increased costs for customers across the European Economic Area.
At issue is whether SAP’s terms around maintenance contracts for on-premise ERP deployments—where customers run the software on their own servers rather than in the cloud—have made it difficult or impossible for rival service providers to compete. Regulators are examining four contractual practices that may have limited customer freedom and created exploitative conditions in violation of Article 102 of the Treaty on the Functioning of the European Union.
SAP acknowledged the investigation but maintained that its policies reflect long-standing global industry norms. The German multinational stated that it does not expect the proceedings to materially impact its financial performance.
What specific practices by SAP have triggered concerns about competition and fairness in the European ERP maintenance market?
According to the Commission’s preliminary assessment, four key practices are under scrutiny. First, SAP requires customers to apply identical maintenance conditions and pricing across all their on-premise ERP products, preventing them from sourcing support selectively or tailoring service levels to different business units. This “all-or-nothing” approach may have eliminated opportunities for enterprises to reduce costs by using third-party providers for portions of their software estate.
Second, the Commission alleges that SAP bars customers from terminating maintenance agreements for unused licenses. In practice, this means companies may continue paying for support on software they no longer use, adding unnecessary costs.
Third, SAP is said to systematically extend the duration of initial license terms, during which termination of maintenance is prohibited. This contractual rigidity may lock companies into longer commitments than they had originally anticipated.
Fourth, reinstatement and back-maintenance fees applied by SAP are viewed as particularly onerous. When customers rejoin SAP’s support ecosystem after a gap, they can be charged the equivalent of all missed fees as though they had never left. Regulators argue that this practice effectively penalizes customers for exploring alternative providers.
Taken together, these practices raise the risk of foreclosure against independent maintenance providers—firms that often compete on price and flexibility—and could be seen as exploitative of SAP’s large customer base in Europe.
How is SAP responding to the antitrust investigation and what signals has it given to investors?
SAP’s public response has emphasized compliance, cooperation, and confidence. The German multinational noted that its policies are consistent with standards commonly observed in the global software industry and expressed readiness to work with the Commission to resolve concerns. Importantly, SAP stated that it does not foresee material financial consequences from the case.
In practical terms, SAP could choose to offer commitments to address the Commission’s concerns. Under EU competition law, companies may propose legally binding remedies—such as allowing more flexibility in contract structures or revising fee policies—without admitting wrongdoing. If accepted, such commitments can close proceedings without fines, which otherwise could be as high as 10 percent of global annual revenues. For SAP, with revenues exceeding €32 billion in fiscal 2024, the theoretical fine ceiling underscores the financial significance of antitrust enforcement.
Why is this case significant for Europe’s enterprise software ecosystem and what does it reveal about regulatory priorities?
Enterprise resource planning software is deeply embedded in European industry. SAP’s ERP systems are used to manage everything from financial accounting and supply chain logistics to human resources and project planning. The recurring fees paid for maintenance and support represent a substantial portion of total IT budgets. For decades, ERP vendors have relied on these steady revenues, with maintenance fees often generating higher margins than initial license sales.
The Commission’s decision to prioritize this case highlights its focus on ensuring that software customers—often large industrial, financial, and public sector organizations—retain meaningful choice in their IT spending. Analysts interpret the investigation as part of Brussels’ wider trend of policing digital markets for lock-in practices, building on actions against U.S. technology firms in areas such as app stores, cloud computing, and online advertising.
By turning its attention to SAP, the EU is signaling that its competition enforcement will apply just as rigorously to Europe’s own digital champions as to international rivals. For the broader enterprise IT sector, the case reinforces a regulatory emphasis on interoperability, portability, and customer freedom of choice.
How do EU antitrust procedures shape the path forward for SAP and its global customer base?
The investigation proceeds under Article 102 TFEU, which prohibits abuse of dominance that restricts competition within the internal market. A preliminary assessment has been issued, laying out the Commission’s competition concerns and inviting SAP to propose commitments.
Unlike merger reviews, antitrust investigations under Article 102 have no statutory deadlines. The timeline will depend on case complexity, SAP’s willingness to cooperate, and the scope of its proposed remedies. If commitments are offered and accepted, the process could conclude in months. If contested, proceedings could extend for years, with potential for litigation in European courts.
For customers, the stakes are straightforward: greater flexibility to terminate unused support, to procure mixed-service arrangements, and to avoid punitive reinstatement fees. These outcomes could lower total cost of ownership for ERP systems across sectors from automotive to retail.
What is the sentiment among institutional investors and how has SAP’s stock responded to the antitrust proceedings?
Shares of SAP SE on the Frankfurt Stock Exchange have remained broadly stable since the Commission’s announcement, indicating that investors do not anticipate immediate financial disruption. Institutional sentiment suggests that the company’s accelerating pivot to cloud revenues provides insulation against legacy disputes tied to on-premise contracts. In fiscal 2024, SAP’s cloud revenue growth outpaced its traditional license maintenance income, a trend expected to continue.
Analysts describe the reputational dimension as more meaningful than direct financial risk. A drawn-out legal confrontation could strain SAP’s regulatory relationships, especially at a time when Europe is seeking to enforce digital competition rules with renewed vigor. However, many investors believe a negotiated outcome through commitments is the most probable scenario, leaving earnings forecasts intact.
The muted market reaction also reflects recognition that SAP remains deeply entrenched in European enterprise operations, with high switching costs and long-term customer relationships that are unlikely to be disrupted by regulatory adjustments.
Could the EU’s probe reshape competitive dynamics in ERP maintenance and open opportunities for independent service providers?
If the Commission compels SAP to alter its policies, the most immediate effect would be an expanded role for third-party maintenance providers. These firms, which often compete on price and customized support, could gain access to a larger customer base if enterprises are freed from uniform contract obligations.
For customers, increased competition could translate into lower prices and better service terms. For SAP, the risk lies in reduced margins from its lucrative maintenance revenue stream. Yet the company’s focus on cloud transformation means its long-term financial model is already shifting toward subscription services and platform offerings, where competitive concerns manifest differently.
The case also sends a broader message to global software vendors that aftermarket restrictions will attract scrutiny in Europe. Firms such as Oracle, Microsoft, and other ERP or enterprise application developers may adjust their policies proactively to avoid similar investigations.
What does the future outlook look like for SAP as it balances regulatory challenges with its cloud-first growth strategy?
Looking ahead, SAP’s trajectory will depend on two intersecting forces: regulatory compliance in its legacy on-premise business and continued expansion in its cloud portfolio. The Commission’s probe highlights the risks of overreliance on restrictive contractual practices, but the company’s rapid shift to cloud-based ERP solutions, such as SAP S/4HANA Cloud, may soften the impact of any mandated changes.
Institutional investors generally view SAP’s long-term outlook as stable, supported by demand for integrated cloud solutions across Europe, North America, and Asia. Analysts point to opportunities in AI-enabled business applications, digital supply chain management, and industry-specific cloud services. While the antitrust proceedings add uncertainty, they are unlikely to derail SAP’s strategic transition.
For enterprises, the outcome of this case could mark a turning point in how they manage IT support spending. If the Commission delivers on its intent to expand choice and flexibility, companies may benefit from lower costs and greater bargaining power. For SAP, the challenge will be to demonstrate that it can continue to innovate and grow without relying on contractual rigidity.
Discover more from Business-News-Today.com
Subscribe to get the latest posts sent to your email.
