The U.S. Department of Justice (DOJ) is investigating German software giant SAP SE SAP and U.S. reseller Carahsoft Technology.
What Happened: The DOJ is investigating two companies over allegations of conspiring to overcharge U.S. government agencies. The civil probe, which has been ongoing since at least 2022, focuses on potential price-fixing schemes involving $2 billion worth of SAP technology sold to U.S. military and government agencies since 2014.
The DOJ is also examining other software resellers, including a unit of Accenture plc ACN, for possible involvement in this market manipulation. The investigation came to light after federal agents raided Carahsoft's Virginia offices, seizing documents and computers. Prosecutors have since filed suit against Carahsoft, to enforce demands for internal communications related to these SAP sales.
Why It Matters: Carahsoft is an important firm in federal technology procurement. Since 2020, the firm has secured more than $3.5 billion in contracts.
SAP technology accounts for a large share of this business, with Carahsoft facilitating over 600 contracts worth nearly $1 billion. If bid-rigging inflated prices on these deals, the government agencies could have been significantly overcharged over the last decade.
Repeated Offenders: Both firms have previously faced legal issues. Carahsoft and VMware paid $75.5 million in 2015 to settle claims of overcharging the government. Recently, SAP settled a $222 million bribery case involving seven countries, including South Africa and Indonesia, further intensifying scrutiny on the company's practices.
Bloomberg reported SAP confirmed it is cooperating fully with the DOJ and stressed that no criminal charges have been filed.
Following the news, SAP and Carahsoft have not cancelled a two-day Executive Summit in San Francisco starting today. The event aims to explore future IT trends and innovations and will feature participants such as Data Scientific CEO Cassie Kozyrkov, bestselling author Sol Rashidi and former OpenAI's Head of Go-To-Market Zack Kass.
Carahsoft has not immediately responded to Benzinga's request for comment.
Price Action: Following the news, SAP stock fell 2.91% to $224.21 on Wednesday. It remains one of the best-performing European large-cap stocks, with a year-to-date gain of around 47%.
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