Ecclestone in talks with EU over F1 anti-competitive allegations

I can’t place my finger on the ultimate reason that Formula One Management did individual deals with the teams a few years ago but it was around the time that the Formula One Teams Association (FOTA) were rattling sabers about starting their own series due to the mandatory budget cap the FIA imposed as well as the timing (this was 2009) of the financial crunch. The teams were trying to work with FOM and the FIA in order to improve the sport as even then they felt it was sliding.

In order to break that power base, Ferrari and Red Bull were lured away from FOTA with individual contracts and Ferrari were then being led by Luca di Montezemolo who was an ally of FOM boss Bernie Ecclestone. If memory serves correctly, Mercedes did not have a seat at the adults table at this point either and they lobbied very hard to get the kind of deal that Ferrari, Red Bull and McLaren were given. A deal was eventually struck and FOTA disappeared.

A few years later and the balance of power has swung to a democracy where the teams have much more power within F1’s direction and the prize money is weighted toward the top teams. Force India and Sauber lodged a complaint with the EU over anti-competitive allegations due to this prize money structure. It was revealed today that the EU has been in talk with FOM’s Ecclestone on the matter.

“They’re starting to get more and more interested in the anti-competitive way that we’ve got,” said Ecclestone.

“Conversations have taken place and they will do what is the right thing to do.”

I said at the time the complaint was filed that Ecclestone might actually welcome the investigation because he knew the power base had shifted and he has contracts with each team that cannot be discarded or it would lead to serious legal action. His comment above is clear indication that he is frustrated with the situation and would welcome the EU’s help in tearing up the existing contract. Ecclestone is publicly saying that they’ve got an anti-competitive situation right now. The reason he says that is relatively plain as I said last year.

It’s clear that the FIA and FOM are not happy with the current contracts and even FIA president Jean Todt was quoted this week saying:

“The governance is not good, but the governance has been there for decades.

“We wait until the renewal of the Concorde Agreement by 2020 and decide to change the governance.

“We are in 2016, and it cannot be until 2020. We cannot get out of this governance.

“Unless the teams, the commercial rights holder and the FIA decide to change, then we can do it tomorrow.”

The FIA knows it isn’t optimum and so does FOM. Both Todt and Ecclestone seem frustrated with the current situation and governance of F1. As I mentioned, I can’t be 100% certain as to why Ecclestone did this deal but I know he must have felt compelled to. It’s interesting because reading Max Mosley’s biography, there was little chance of the teams ever realistically starting their own series. The FIA has the legal right to govern any racing series and FOM has the circuits locked down with contracts. So why did he do these individual deals and not a new Concorde Agreement? The short answer is that he must have had to but it would only be speculation on my part as to why.

The deal Ecclestone did with Ferrari isn’t a deal he thought he would eventually have with Sergio Marchionne who would make the most of a lucrative or sweet deal that Ferrari signed. Where Di Montezemolo may not have played hardball with the benefits that were given the Ferrari, Sergio will. Luca would have been more measured and respectful of the long relationship he’s had with Ecclestone (to a point) and Sergio has no history there. At least that’s my hunch. Sergio, along with Mercedes, has leaned pretty heavily on the sport even denying Red Bull engines and demanding $20-30M for engine contracts bankrupting smaller teams.

It’s their right as organizations signatory to F1’s current governance structure and if you were to measure the success of deals done, Ecclestone would most likely say this one was one of his worst. That, in my opinion, is why he is welcoming the EU’s involvement. A judgment by the EU could legally negate the contracts—which are set until 2020—and would dissolve any legal breach by FOM or the FIA. I said it back in September of 2015 and I still believe it now given Ecclestone’s statement above. Ecclestone is looking for a way out of this contractual obligation with the teams that has given them tremendous power in a democracy format.

The odd thing is that Todt is very keen to have this democracy continue or at least that’s what he says and why shouldn’t he? He would either want total control of the sport or a democracy but not total control lying in the hand of FOM. You can read his full comment at AUTOSPORT about having complete control of the sport. Todt also commented on the EU investigation saying: “Yeah, if the EU got really excited about it they could look at it and say, ‘You’ve got to tear that up’.”

It seems pretty clear that the FIA and FOM are not opposed to the EU canceling their current contracts, in fact, they would most likely welcome the assist.

Hat Tip: AUTOSPORT