EU told it must act on teams’ F1 complaint

2015 F1 season

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The European Union has been urged to act on a complaint from two teams that it may have violated competition rules.

Force India and Sauber confirmed last week they had formally complained to the EU about how F1 is being managed.

Caterham sank at the end of 2014
The EU’s Commissioner for Competition Margrethe Vestager is now being urged by Labour MEP for the South-east Annaliese Dodds to act on the complaint.

“We have already seen the EU getting left behind as the US and Switzerland launched an investigation into FIFA,” said Dodds. “Following complaints within the sport of F1, the EU must take the lead on a sport loved by many across Europe.”

“We have already seen Caterham and Marussia, two Oxfordshire-based teams, being forced to close. In Caterham’s case, this involved the loss of many dozens of highly-skilled jobs. Lotus, also based in Oxfordshire, has also been in financial difficulties and is in the middle of a protracted take-over with Renault.”

In a letter to the commissioner this week, Dodds said the teams’ complaint indicates F1 may be in violation of Article 101 and Article 102 of the Treaty on the Functioning of the European Union.

The teams have objected to the favourable financial terms and greater role in the rule-making process given to some teams. However Dodds also queried whether it was proper for the FIA, as F1’s regulator, to own shares in F1 Group.

“It is very unusual for a regulator to have a financial stake in what it is regulating,” said Dodds. “Recent developments are akin to the Food Standards Authority taking a stake in McDonalds, or the Health and Safety Executive buying up a factory.”

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    32 comments on “EU told it must act on teams’ F1 complaint”

    1. Indeed, we all know for years rules and governance of FIA and FOM are dirty… But hard to find a law they violate. There is no law dictating racing should be good and money should be spread equally.

      1. There is no law is not about fair racing. Bu there are laws about fair competition. Considering that the Strategy Group, FOM, FIA and Bernie isin’t allowing fair competition through contracts, extra deals, and centralized power, there is indeed a case.

        1. Yes, there is a case, lets hope good enough for EU to take action… And something different than 10% revenue fine. Still imagine FOM just moving to Singapore….

    2. Imagine a restaurant owner who clearly has a financial stake in his restaurant making the house rules. Unbelievable..

      We need an EU-office making the rules for F1, I am sure that would make F1 awesome.

      1. FIA does not own the teams. They are just a regulator of everything motorsport and really shouldn’t be owning any shares in a particular motorsport.

        1. @rojov123

          They are not “just” regulators. It is not called “FIA Formula One World Championship” for nothing. It is their thing, and just as a cinema owner demands its customers to switch off their mobile phones during a movie, so the FIA as owner makes the house rules of F1.

          1. The fact it is the fia f1 world championship is reference to the fia as the regulators of the sport not the owners of the sport. There are several fia championships world wide and I’m not aware of any others where the fia has shares in the commercial rights. The reason why regulation and commercial rights are kept separate is that formula 1 is a sport and therefore must maintain its sporting integrity. Consider for instance if the fia has to make a decision to the detriment of a popular team which could impact future commercial profitability, there would be a clear conflict of interest.

          2. With you on that first centence. But after that you make a failure in your reasoning. The fact that the EU let the FIA govern this sport as the SOLE regulating body for Motorsport and F1 (instead of having other federations compete with them like we have competition between cinemas, and indeed restaurants), means that the FIA has an obligation to uphold a fair competition and also means the FIA was forbidden from taking an interest in the commercial exploitation of the sport (an EU ruling/agreement based on earlier complaints). That was why the FIA sold FOM the commerical rights in the first place @skylien

          3. @skylien
            I am not saying that FIA are not part owners of F1. They are. But the question is should they be allowed to be? FIA is the governing body for motorsports. Not just for F1. They have to have equal interest in other motorsports a well. But currently, they do own shares in F1. It is indeed a conflict of interest.

          4. @rojov123, @bascb, crowspite

            No, as long as they are the owner of all those racing formulas, there is no conflict of interest, because for the FIA as owner there counts only one interest, its own. There is no other interest that they have to follow, of course they have to honor all the contracts they signed. They have to decide how to balance different racing series. It is like VW who also owns Audi. If they start making cars with Audi that look like Golfs, and are completely like Golfs, and therefore create two cars for the same market, it is their decision. They lose money for this bad business decision.

            Guys imagine you create a racing series tomorrow, who is to decide the formula for it? Only Porsches, or open wheel, or mini bikes vs monster trucks, which tracks etc? The FIA? No, obviously it is you, since are creating it, so you are making the rules for it. And if next year you create a second racing series, what is then? Then it is the same. If you, for the sake of the argument, make a racing series which is a carbon copy of the first one, then this is just your decision if you cannibalize the fans of your first racing series. It is just a stupid business decision and will make you lose money. And if you want you can just shut down any of those racing series, or sell the rights of them to someone else, or you can run them profitably (= fans like it!) or badly (= fans abandon it)…

            And it should be clear that to have some “ordinary” independent racing team in your series will cost much less, than getting Ferrari in it. That is pure negotiation. You don’t have EU bureaucrats with you when go buy a used car to watch if the price is “right”.. What is the right price? It is the price which both parties agree on and sign the contract. Period.

            1. Sorry, but it seems you completely miscomprehend private ownership and cometetion rules @skylien.

              A company, organisation or who-ever is not allowed to operate a monopoly (like running ALL racing series, all energy suppliers, the sole operating system etc) under either EU law, nor US law etc.

              The FIA was only allowed by the EU to continue to be the sole awknoledged regulator (i.e. a monopoly position) on the provision that they would NOT be involved in the commercial side of the sports and remain an impartial regulator.
              Because of having received a 5% share in FOM and allowing a few of the competitors in F1 significant advantages over other competitors (both through money and privilidged position in rule making), the FIA quite likely is not heeding the agreement made decades ago that is the basis of the current structure of F1.

              As for your statement over “EU-bureaucrats” and buying a used car, let me assure you that there are enough anti-competition suits running against groups of used car salesmen for making agreements over minimum prices (this happens a lot).

            2. @basc33

              But the FIA doesn’t own all racing series. Well I do know a thing or two about monopolies. And the only real monopolies are created by states with protection of law. Like tobacco industries, postal services, casinos. And unfortunately the worst of all and with the biggest harming effects are the Banks that are organized like a cartel via a central bank etc.

              Without state protection there is always competition, even if currently there was only one firm in one area, then only the threat of competition already constraints it in making prices whatever it wants. If it raised prices to high, there would be competition in form of a second firm faster than you can say monopoly..

              However I digress and don’t want to start a very long discussion. I also know that the EU does make some desperate attempts at “increasing” competition with their anti cartel/monopoly office, however they are at best useless and usually rather harmful. And if this was the case why the FIA outsourced certain things to another organization which is the FOM (with a 100 year contract), so be it, however this is beside the point. This complaint goes rather against FOM, of which Bernie is the chief executive negotiating the contracts, complaining that there is too less money for them and the strategy group is „unfair“.

              However if as you say there are decade old agreements which are now violated, then there need to be contracts. And if those are broken then this is a standard case for any court. However that obviously is not the case. It rather seems like those teams signed bullet proof contracts (agreed to the amount of money they would get for participating, and the strategy group as it is) and having no basis for a standard legal claim they try it with the back door via the cartel office of the EU…

    3. Mr Dodds obviously doesn’t understand the difference between general laws that should count for everything/all people at all times and specific rules owners of whatever can apply arbitrarily to their stuff they own, well because they own it. If they can’t set such rules then they don’t own it. That is the actual meaning of owning something.

      1. But the question is should FIA, a regulator of motorsport own shares in F1? It is a conflict of interest.

        1. Yes, just as the restaurant owner as regulator of what is allowed in his restaurant obviously owns the shares of his restaurant.

          1. Umm, that’s not the same thing, by any stretch of the imagination and for you to claim they are is ridiculous.

            A restaurant owner and their decisions just affects his or her own restaurant, which may only have ten employees. The FIA’s decisions (or lack of) affect nearly a dozen teams, nearly two dozen drivers, thousands of team employees and so on throughout the entire planet. This is a multi-billion dollar business.

            Comparing a global sport to a restaurant is inane and laughable. What you should be comparing the sport to is (drum roll) other global sports.

            1. McDonalds?

            2. @skylien,

              McDonalds ?

              Your getting closer, You could consider the FIA as the franchisor and the teams the franchisees. A franchisee has a right to expect that the franchisee down the road is paying the same rates for food and fees as he is, it would be grossly unfair if 1 store was gifted large discounts which allowed him to employ more staff and redecorate more often, it would be even more unfair if the favored store gained extra discounts because it was selling more burgers than the full priced franchisee, then consider the situation as above when the franchisor was a partner of the discounted franchisee.

            3. No you are wrong. It is a thing of negotiation. That McDonalds has equal prices for all customers has nothing to do with it, it is a business decision because it doesn’t make sense for them to make different prices for different customers. E.g. it is different for cars, there every person gets a different price because net everyone is able to negotiate the same deal. Some get huge disccounts others nearly none. It has nothing to do with unfair. Negotiating a price is just that. If you think a deal is not “fair” then don’t buy (whatever, a new car, a used car, a franchise deal with McDonalds, or grid place in F1).

      2. But the laws of a business or ownership are always bedded within the greater laws. Say I own a company. I’m not allowed to physically abuse the workers, because the laws of the country forbid it. Or, taking out the human element, If I own a piece of land, I can’t legally dump piles of toxic waste on it. F1, and sports, have an effect on people outside of its realm, and therefore should be held to laws that apply to all.

        1. Of course you can’t make house rules that go against the general law. You cannot physically abuse workers, but you can demand that they may wear some corporate cloths when visiting a customer etc..

          1. You need to make up your mind. In your first post (14:50), you said that owners can arbitrarily apply rules to their “stuff”. Now you’re saying it’s not so arbitrary after all.

            1. Well, aside from general rules they make “arbitrary” rules. I clearly wrote that the general laws apply always, everywhere and for all..

            2. general rules = general laws I mean

      3. Ms Dodds, sorry..

    4. Who is Mr. Dodds..?

      1. Who is Mr. Dodds..?

        1. I believe you may have given this poor woman a sex change – Labour MEP for the South-east Annaliese Dodds.

      2. She’s not a ‘Mr’, and it says in the third paragraph.

    5. I’m sure they will act… in 2021 or thereabouts.

      1. All they will do is mess things up even more like they did by forcing FIA to sell the commercial rights to a third party.

        It’s hilarious how they thought giving some outside party control over all the income from F1 is actually better than keeping the money within the sport. But we can say thanks to the EU for the loss of 50% of the income generated by F1 anyway. Lets see how much worse they can make it after another round of the usual EU incompetence.

    6. Dodds is not a mister so she’s a……Meester in de rechten ?

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