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F1 set to face imminent EU Commission investigation

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F1 set to face imminent EU Commission investigation
Jun 6, 2015, 4:24 AM

The controversial F1 Strategy Group is set to be the focus of a formal complaint to European Union regulators by some of F1's smaller teams, with t...

The controversial F1 Strategy Group is set to be the focus of a formal complaint to European Union regulators by some of F1's smaller teams, with the process likely to be launched within a month.

There have been rumours for some time of the EU considering taking a closer look at Formula 1's governance and financial structure, which awards sums of up to $100m individually to the top teams in a deal which runs to 2020.

But without a formal complaint, no investigation has so far been triggered. That is set to change, according to the Financial Times, as some of the smaller teams are preparing the nuclear option of challenging the status quo through EU channels. They feel excluded from both the financial and regulatory benefits enjoyed by the top teams. Their complaints within the F1 ecosystem have led them nowhere, so this is the result.

There are no details at present of which teams are behind the complaint. Two teams went into administration last season; Caterham and Marussia, although Marussia has been revived this year as Manor GP. Other small teams Sauber, Lotus and Force India are bitter at receiving barely a third of the amount Ferrari and Red Bull earn from the central prize fund. They are also concerned about recent F1 Strategy Group moves, such as the talk of obliging them to use customer cars.

Start China 2015

Although sceptics may take the view that this development is no more than a way to rattle the cage of F1's rulers, F1 Management and its majority owners CVC, that the small teams would stop short of going through with it if a financial deal were offered, the complainants insist that there is unstoppable momentum behind it now.

An EU challenge would open the sport up to intense scrutiny and could lead to instructions to make changes. The timing is less than ideal with the current scandals swirling around football's governing body, FIFA.

Those FBI and Swiss-led investigations concern corruption; while there is no suggestion of that in a potential EU F1 case at this stage, the EU may well have been stung by widespread accusations that it failed to look closely at FIFA and that it took the Americans to act.

Bernie Ecclestone, who runs F1 Management and who was one of the architects of the F1 Strategy Group, called recently for it to be disbanded, as it is not working as he had hoped.

He told the FT, “It is strange. I would like to know what they [the smaller teams] want. Nobody has ever made any requests to me about what they want. We will wait for the complaint. They all signed contracts. I hope the complaint goes ahead and the competition authorities have enough patience and time to deal with it.”

Margrethe Vestager

The EU competition commissioner Margarethe Vestager has launched cases against Google and Gazprom already during her first year in office. These tend to be cases wherein complainants are reluctant to commit to a formal process, for fear of reprisals, but once one is launched, other complainants quickly join the party.

It seems that to get the EU involved, the complaint would have to convince the competition regulators that the actions of F1's rulers caused some kind of broad damage to fans and/or the wider economy, not just that some teams had been handicapped.

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