Possible EU Investigation into F1

Back in 1999 the European Commission concluded an investigation into the way Formula 1 was run, and made a number of recommendations designed to give power to the FIA as the governing body and reduce the influence of Bernie Ecclestone and the FOCA.  At the time there were concerns over the management of the sport and whether it was anti competitive.

Recent upheaval which appears to have hit a crescendo with the small teams letter to Bernie Ecclestone this week and the request for a meeting in Abu Dhabi have raised the very real possibility that F1 could face another investigation into way the sport is run.

According to Joe Sawards blog, the letter from the teams included the following section:

Furthermore, the impact of providing various share options to key people and entities may well have clouded their judgement in respect of creating what is effectively a questionable cartel comprising, the Commercial Rights Holder, Ferrari, Red Bull, Mercedes, McLaren and Williams, controlling both the governance of Formula 1 and apparently, the distribution of FOM funds.

From a legal perspective, a cartel is an association with the specific objective of reducing competition.  The argument from the smaller teams is quite clear – that the power of the F1 Strategy Group along with CVC (the commercial rights holder) is used to the benefit of the teams within that group.  The specific criticisms are that the power held by the larger teams is abused to set regulations and commercial elements of the sport in a way that benefits them at the expense of the smaller teams like Force India or Sauber.

bernie-ecclestone

An EU investigation into the way F1 is run would be hugely unwelcome from CVC’s perspective, as they still have a long term objective of selling their stake in the sport, and any enforced changes to their ownership would inevitably reduce the value that they could hope to realise.

The fact that the previous investigation concluded that the commercial and regulatory roles must be separated means that the commercial rights holder should not have a say in the rules of the sport.  This is important – Bernie Ecclestone’s claims that he pushed for the double points season finale would be a clear breach of the agreement ruling albeit very difficult to prove.

Has an Investigation Already Started?

Back in April this year, Fox Sports reported that EU officials had already taken steps to start monitoring F1 based on concerns voiced at the time by the smaller teams, and there is a parallel investigation being run into the promotion of alcohol through sponsorship of teams (Johnnie Walker at McLaren, Martini at Williams, and Smirnoff at Force India to name 3).

Any investigation by the EU is likely to take some time however, and would be unlikely to affect the championship over the next couple of years.

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