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FIA denies F1 sale conflict of interest

Following the unanimous approval by the World Motor Sport Council of the change of control of Delta Topco Limited (the holding company of the Commercial Rights Holder of the FIA Formula One World Championship) from CVC Capital Partners in favour of Liberty Media Corporation on 18 January 2017, motor sport governing body the Fédération Internationale de l’Automobile (FIA) has been made aware of certain declarations and comments, clearly inaccurately informed or made maliciously, relating to this process.

In light of this, the FIA has issued a statement of clarification reiterating that:

  • Firstly, the prize money allocated in the Formula One World Championship is done so in accordance with the bilateral agreements that exist between each team and the Commercial Rights Holder (CRH). The FIA has no knowledge of these agreements
  • Secondly, there is no conflict of interest on the part of the FIA with regard to its approval of the change of control of the CRH which has been approved by the World Motor Sport Council taking into consideration exclusively the terms of the existing agreements between the CRH and the FIA and the best interests of the Championship
  • As per the Agreements made in 2001 for 100 Years, the FIA could only have withheld its consent in the event that the change of control would materially alter the ability of the CRH to fulfil its obligations; it is obvious that the taking of control of the Formula One Group by Liberty does not create such a risk, and nobody has ever suggested a different view in this respect

The FIA says it would naturally be happy to demonstrate the absence of any conflict of interest to any competent authority that may so request.

“Once again, the FIA looks forward to its collaboration with both Liberty and the Formula One Group to create a constructive relationship that will ensure the continued success and the development of the FIA Formula One World Championship in the long term,” it concludes.

The European Parliament on February 14th backed calls for Formula One to be investigated for allegations of anti-competition practices. In January 2017, a report was produced by the European Parliament which could lead to the EC’s competitions commission to investigate F1’s governance and payment structure. Anneliese Dodds, a UK member of the European parliament, submitted an amendment to the report calling for “an immediate investigation into competition concerns” in F1.

The amendment was passed by 467 votes to 156, with 86 abstentions.

“I’m happy that today the European Parliament backed my call for a full and immediate investigation into anti-competitive practices in Formula One,” she said. “A few weeks ago, Manor Racing became the latest team in the south east of England to collapse after administrators failed to find a buyer.”

“Smaller teams are unfairly punished by an uncompetitive allocation of prize money that will always give the biggest teams more money, even if they finish last in every race. The problems in Formula One extend well beyond the allocation of prize money, with serious concerns being raised about an agreement with HM Revenue and Customs that allowed the sport to pay an effective two per cent tax rate.”

Dodds also expressed concerns about the sale and whether the FIA had benefited financially. “There is also significant conflict of interest over the recent sale of the sport to Liberty Media, after the regulator received a $79.5 million [€74.62m] profit from authorising the sale. I have written a number of letters to the European Commission calling for a full investigation and I am grateful that the rest of the European Parliament has added its voice to this call,” she stated.

If the European Commission decides to investigate Formula One and finds the sport guilty of anti-competitive practices it can issue a fine of up to 10 per cent of its annual turnover – currently around £1.35 billion.

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