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There could be trouble on the horizon for Formula 1’s FOM and Strategy Group. Reports emerged over the weekend that FOM could be the subject of a formal complaint to the European Union regulators by some of the smaller teams within the sport in relation to how the sport is being managed.
This new action is follows the smaller teams’ failed attempt at boycotting the 2014 Austin Grand Prix amid guarantees by FOM Chief Executive Bernie Ecclestone to review the allocation of payments. Since then, momentum towards a possible complaint has been building, with the smaller outfits accusing the sport’s controversial Strategy Group of slowly pushing them to the brink of collapse by prioritising the interests of the bigger teams.
Financial problems has seen both Caterham and Marussia forced into administration with others also on the brink, most notably Sauber and Lotus and of course Force India who is yet to introduce the b-spec version of their car.
The purpose of the formal complaint to the EU regulator is to have them take a closer look at the current governance and financial structure of Formula One. Currently sums of up to $100m is awarded individually to the top teams in a deal which runs to 2020 as well as no representation of the small teams at Formula One’s Strategy Group. The outcome of this investigation by the EU regulator should determine whether the governance and financial structure contravenes competition rules.
Since taking up the post of the EU’s competition commissioner last year, Margrethe Vestager, has so far launched cases against major organisations such as Google and the Russian state-controlled gas monopoly Gazprom. Showing she has the drive to go after the big companies it is likely that FOM will not be a task to big for Vestager. The complaint would be against Formula One Management and F1’s commercial rights holder led by Bernie Ecclestone and FOM’s largest shareholder private equity group CVC Capital Partners.
Presently there are no details as to who the teams behind the complaint are however those involved said the complaint would more than likely be sent to Vestager fairly soon. “There’s a head of steam now. This isn’t a problem that’s going away,” said one.
According to the Financial Times, there are two main elements to this complaint.
“First, it contends that F1’s strategy group, the body that makes judgments on areas such as technology, regulation and car design, tilts decisions in favour of the leading teams.”
“They also contend that F1’s revenues from media rights and sponsorship are allocated disproportionately in favour of the bigger teams. Even when it fails to win the championship, Ferrari still gets the largest payout, the smaller teams allege.”
Not all the smaller teams would be involved in the complaint and many of the potential signatories have asked to remain anonymous due to the fear of retaliation.
When asked recently about the pending complaint, Bernie Ecclestone sounded somewhat optimistic. “It is strange. I would like to know what they [the smaller teams] want,” he told the Financial Times. “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.”
When asked to comment on the merits of the complaint, Vestager remarked that she would continue to “monitor the situation closely”.
Those close to the complaint have stated that they are currently finalising their submission so as to ensure it addressed initial reservations from the EU.
For such a complaint to be successful, officials in Brussels have stated that they would need to establish whether the sports current structure caused broad harm to fans and the wider economy, and not simply there to handicap the smaller teams.
Keep your eyes glued to this space for further updates….