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Call for F1 investigation over allegations of Anti-Competitive Practice

Posted on 17 February 2017

Call for F1 investigation over allegations of Anti-Competitive Practices

Anneliese Dodds, Labour MEP for the southeast of England, has called for an immediate investigation into competition concerns arising from the Formula One motorsport industry.  Her reported concerns relate not only to the unequal distribution of prize money amongst the teams, but also the significant profit made by the FIA from the sale of its stake in the parent company of Formula One (Delta Topco), and the agreement with HMRC that allowed the sport to pay an effective tax rate of just 2 per cent in the UK.

A complaint by Sauber and Force India, challenging the revenue sharing and governance arrangements in the sport, was lodged with the EU Commission in September 2015.  Information requests were allegedly sent out by the EU Commission to the 11 teams and the sport's previous owners some time ago.  What the EU Commission proposes to do next is unclear.

It would appear the complaint by Sauber and Force India is not about an alleged cartel, but about the unequal treatment of the smaller/newer teams who did not have the benefits afforded to Ferrari, Mercedes, Red Bull, McLaren and Williams.  The EU Commission may well currently be grappling with the issue of whether these contractual arrangements should be declared incompatible with the EU's Competition Rules and, if so, how they might be modified.  This is not new territory for the EU Commission, having investigated the contractual arrangements relating to the sport back in 1999.  That investigation was brought to an end in late 2001 when the FIA offered to make changes which were accepted by the EU Commission.

The new Chairman of Formula One, Chase Carey, has said the sport needs to change and evolve.  It has certainly been criticised for the lack of noise and for being too predictable, following the recent dominance of Mercedes and previously Red Bull.  If it is to continue attracting the sponsors, new talent and race-goers alike, the sport needs to recapture some of that lost excitement.  Whether the sport's evolution includes changing the existing governance and rewards systems remains to be seen.