European Commission Competition Directorate

[Maxmil]

Formula1.com has published the following with respect to this long- running matter. Admittedly, the website has an axe to grind with FIA et al, but the Commission's Release and Notice do make very interesting reading. (They may be downloaded/copied off the site.) It seems to me that the eurocrats will sooner or later force some changes in the organization and governance of F1. Who knows, Bernie's days may be numbered.

"An opportunity for you to have a say in your sport 17 Aug 2001

The FIA and Formula One Management (FOM), which is run by Bernie Ecclestone, have been the subject of a long running investigation by the European Commission (EC) Competition Directorate. The department recently published a proposed settlement, and is inviting comment from third parties by 1 September (revised date). We are encouraging our viewers to participate in the sport by sending their opinions to the Commission. The address and fax number appear at the bottom of this article.
The former EC commissioner, Karel van Miert, who commenced the investigation, told the Wall Street Journal in early 1998 "I've never had a case with so many infringements" and commented that this is the single worst case of antitrust (anti-competition) violation that he had ever seen.

The case partly results from complaints made to the Commission by two small companies, GTR and AETV. The companies were involved in GT racing and truck racing. They alleged that the actions taken by the FIA and Ecclestone's companies abused their dominant positions and would drive the smaller companies out of business.

Subsequently both companies settled their complaints against the FIA and FOM, allegedly for significant sums of money. But the EC nonetheless wanted to resolve some of the issues raised.

In June 1999, the EC published a statement of objections which identified four competition problems and stated that:
1) The FIA uses its power to block series which compete with its own events
2) The FIA has used this power to force a competing series out of the market
3) The FIA uses its power abusively to acquire all the television rights to international motor sports events
4) FOA and the FIA protect the Formula One championship from competition by tying up everything that is needed to stage a rival championship.

Click for the EC's official release and the proposed settlement.

While the proposed settlement between FIA/FOM and the EC goes some way toward addressing certain issues, there are a number of apparent oversights. In Europe contracts of more than three to five years are usually frowned upon by the EC as constraining competition. Yet the Concorde Agreement is ten years and the Formula One Agreement is fourteen years. The Concorde Agreement governs the relationship between the teams, FOM and the FIA. The Formula One Agreement grants TV and other rights to the FOM group of companies.

These two agreements have not had their lengths shortened. There is no real explanation or justification for allowing these longer agreements, and the effect is likely to reduce competition. For example, had they been shorter, the manufacturers may have had the opportunity to enter into the sport as rights holders by having the opportunity to bid for TV rights.

There have been concerns that the new owners of FOM, Kirch, might have a tendency to favour Pay TV, though this has been vehemently denied. Pay TV may be seen to reduce the fans' access to the sport. In the United States this year coverage is only broadcast on the cable channel Speedvision, which is not accessible in all regions. Hence if the length of the two agreements were reduced, the rights ownership may be reviewed, and this may be in the interests of the fans.

Furthermore, the settlement proposal involved the FIA making some unilateral changes to the Concorde Agreement, which the teams are allegedly objecting to.

As many of our readers may know, the FIA and FOM are subject to a separate antitrust action from Formula1.com. One of Ecclestone's companies resoundingly lost a domain name arbitration held under the auspices of the World Intellectual Property Organisation regarding F1.com, when it was found that F1 and formula one are generic and descriptive terms. Despite this, one of his companies decided to sue formula1.com, alleging that formula1.com Limited are cybersquatters.

But, in our opinion and as alleged in our antitrust case, these two organisations have taken a number of other steps in order to try to abuse their dominant positions in an attempt to drive a small company like formula1.com out of business. These allegations include amongst others, disrupting our supply of merchandise and photography, interference with our sponsors and interference with our relationships with teams. Hypothetically, if the FIA and FOM were to succeed in killing off all the unofficial web sites that cover this sport, you the consumer will have your choice severely restricted.

One of the primary purposes of the Competition Directorate is to maintain competition and to protect your choice as consumers.

If you plan to write or send a fax to the EC, the address is below. Please ensure you quote the Reference. While we would be happy for you to mention formula1.com's plight, the focus of the response should rather relate to the current EC complaints and settlement and hence your opinions about the length of the Concorde and Formula One Agreements are more relevant topics.

Reference: COMP/35.163 FIA, COMP/ 36.638 FIA/FOA

European Commission
Directorate-General for Competition
Directorate C
Rue de la Loi/Wetstraat 200
B-1049 Brussels
Belgium
Fax: (+) 32 2 296 9804"



et al

[EERO]

Thaknks for posting this Maxmil. I encourage everyone who has a real interest in the state of F1 to write to the EC.

[Bononi]

Good advise. We all shall do that.

[economy_waffle]

cheers for that m8....now where did i leave my pen - oh darn it bernie has shoved it up his.....

[Nicholas]

This reminds me of a short article in F1 Racing about the August '99 edition of the magazine Eurobusiness, which featured Karel van Miert on the front cover, calling him "The most powerful man in Europe," generally being very nice about him...And who owns Eurobusiness? A certain Bernie Ecclestone...