Shares in software giant SAP (SAP) crashed today as it offered to make it easier for customers to switch to rivals’ products as part of an EU antitrust probe.
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Customer Choice
It said SAP customers will be able to choose between different support services suppliers as well as opt for different levels of SAP support or for no SAP support at all.
SAP also offered to clarify the basis for its fees and abolish its reinstatement fee as part of the concessions it has proposed to the EU.
The European Commission opened the probe into SAP in September on the grounds of potential anticompetitive practices related to the software group’s enterprise resource planning (ERP) software.
It said it wanted to assess whether SAP had distorted competition in the aftermarket for maintenance and support services related to ERP in Europe.
This is used by companies to oversee and streamline operations in areas like finance, sales, human resources, supply chain and procurement.
It is typically offered through the cloud but also made available on premises such as a client’s data center.
EU officials have said that SAP requires clients to seek maintenance and support services from SAP itself for its on-premises ERP software, potentially restricting competition for third-party providers.
Potential Fine
The Commission, which is inviting all ‘interested parties’ to give their view on the commitments said that if the commitments are made binding, they will apply to all current and future customers worldwide.
The commitments offered by SAP would remain in force for 10 years. Their implementation will be monitored by a monitoring trustee who will report regularly to the Commission.
If SAP does not honour the commitments, the Commission may impose a fine of up to 10% of its worldwide annual turnover without having to find an infringement of EU antitrust rules, or a periodic penalty payment of 5% per day of its daily turnover for every day of non-compliance.
It is why legal and regulatory issues are such a key risk for tech firms like SAP, and investors interested in the stock.
Is SAP a Good Stock to Buy Now?
On TipRanks, SAP has a Strong Buy consensus based on 4 Buy and 1 Hold ratings. Its highest price target is $348. SAP stock’s consensus price target is $332.67, implying a 32.09% upside.
