European Commission investigates anti-trust allegation of F1 / FIA

While Formula 1 teams are wrangling with the fact that some have lots of cash and spend it liberally, others have much less cash and cannot afford the current format of F1 from a financial standpoint. The FIA has been at the center of some of the drama as a regulatory body intent on cutting costs yet rubber-stamping the biggest cost increase in the sport’s history in the form of a new hybrid engine.

Small teams have appealed to the FIA for help but some have labeled the organization as impotent on the issue and now it seems that the FIA has caught the attention of some with regards to their ownership of shares in F1.

In a letter dated 20 November 2014, British politician Anneliese Dodds says “the Federation obtained a direct commercial interest in the championship. This seems to be inconsistent with the terms of the 2001 agreement.”

As Forbes points out, the agreement made in 2001 was with regards to the FIA, was part of a settlement in which it was deemed:

“the role of FIA will be limited to that of a sports regulator, with no commercial conflicts of interest.” It added that “to prevent conflicts of interest, FIA has sold all its rights in the FIA Formula One World Championship.”

As of November 2013, the FIA did take possession of 1% of the shares in F1. Now Dodd is seeking an inquiry from the European Commission into a breach of the anti-trust agreement as well as an anti-competition position within the sport.

The letter also cites the creation of the F1 Strategy Group that the FIA is member of and the fact that they group has vetoed such things as a budget cap and other initiatives. This, the letter says, has caused serious damage:

“A number of F1 teams and related engineering companies are based in my constituency of the South East of England,” says the letter adding that the collapse of the two teams has led to “a resulting loss of jobs in a highly skilled sector of the UK manufacturing industry. The failure of these businesses has occurred amid concerns that smaller teams have been treated unfairly whilst also being excluded from the F1’s rule-making process.”

Some have made note that the F1 Strategy Group was created with the consent of all teams, including the teams who aren’t represented in the group. The rebuttal to that has been that this was foisted upon the small teams over new contracts to be signed and not properly handled.

The issue has been received but the EC and a formal reply is expected. The letter finished with a very pointed commentary about the FIA’s position in this matter:

“it is therefore disturbing that the FIA now seems to be powerless to act to ensure that all F1 teams are treated fairly. In fact, it appears that last year the FIA accepted a dilution of its regulatory authority in a new agreement with the promoters of F1.”

Hat Tip: Forbes

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