FIA, Circuit de Catalunya, 2016

FIA attacks “malicious” reports over ‘conflict of interest’ in F1 sale

2017 F1 seasonPosted on | Author Keith Collantine

The FIA has strongly criticised reports that is had acted improperly in regard to the sale of Formula One to Liberty Media.

The sport’s governing body denied any conflict of interest over the sale and said it is willing to demonstrate the same to “any competent authority that may so request”.

The FIA also addressed criticism of the distribution of prize money within Formula One, saying it has “no knowledge” of how Formula One distributes earnings between teams.

“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, the Federation Internationale de l’Automobile (FIA) has been made aware of certain declarations and comments, clearly inaccurately informed or made maliciously, relating to this process,” it said in a statement.

“In light of this, the FIA wishes to make clear the following once again:

“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 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.”

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  • 19 comments on “FIA attacks “malicious” reports over ‘conflict of interest’ in F1 sale”

    1. Some young literary types, obviously.

    2. Off course there is a conflict of interest. May be not in the way the FIA presents it, but the FIA itself had a stake in the CRH, which it shouldn’t have had. As ruled by the European Union in 2001.

      The role of FIA will be limited to that of a sports regulator, with no commercial conflicts of interest;

      1. Jelle van der Meer
        16th February 2017, 11:36

        Well how is the FIA then different to for example IOC and I think the IOC is far more corrupt than the FIA is.

        1. The FIA made that agreement with the European Commission because it needed to do something major to avoid getting declared guilty of anti-competitive practises back in 2001. The EU only steps in when a particular organisation is believed to have abused a dominant market position, not in the general case or just because a dominant market position exists.

          The IOC has yet to make such a severe mis-step as the FIA and FOM did, and thus has more freedom of action (including the right to intermix sporting and commercial interests).

          1. And very clearly the FIA is trying hard to convince the world that by
            allowing CVC Capital Partners under it’s official title of FOM to make
            cash payments to the FIA under an agreement it ( FIA ) signed as a
            beneficiary of it’s commercial allignment with FOM.

            If this is not an example of a gamekeeper working in total co-operation
            with a convicted poacher then I am at a loss to find accurate words
            in the English language to describe what is happening in Formula 1
            at this time.

        2. @alianora-la-canta The IOC cannot operate without the blessing of a manufacturer. We’re talking about changing engine rules as VW group sees fit, the whole 24 hours are marketed and produced by the manufacturers, it’s a joke.

          1. @peartree I’m not sure we’re discussing the same IOC here. (The only things I can think of which “marketed and produced by the manufacturers” could describe would be sportscars, which are a) FIA- and ACO-organised and b) hasn’t had an adverse ruling against it).

            1. (For clarity, I understood “IOC” to mean International Olympic Committee, which has nothing to do with engine rules or manufacturers in that sense of the word – or 24-hour events of any kind).

            2. @alianora-la-canta Pardon, I got lost in translation. Not really, I did mistake IOC for ACO.

            3. @peartree The ACO hasn’t been in a position to attempt the sort of abuse of dominant market abuse that the FIA did regarding F1 since the 1960s (which was pre-EU). Indeed, it was arguably the victim of such behaviour in the early 1990s (though it didn’t see the point of spending the next half-decade suing the organisation that underpins its safety regulations). It was only when the ITC got pushed past breaking point in 1996 that the FIA got someone with no more to lose, resulting in the

              EU law is not the same as USA competition law. USA competition law, for the most part, exists to regulate how companies in general relate to one another. As such, all companies have to follow the same rules. The EU assumes that member states will do the “general regulation” side (which for most states, is lighter than the requirements for the typical American state/federal combination) and focuses on preventing the abuse of dominant market positions. As a general rule, any organisation with less than 40% of the market in question is assumed to not possess a dominant market position. A company cannot illegally abuse a position if the court doesn’t think it has one. (And yes, this does mean that in effect, very large companies are bound by slightly more restrictive rules than small ones).

              At present, the EU defines motor sport as a market in itself, without subdividing its disciplines into individual sub-markets. So although the ACO clearly has rather more than 40% of the sportscar series in terms of share, it doesn’t have 40% of the motorsport market. This wouldn’t help it in a American court but does in an EU one. For the ACO to be sued for an alleged breach in the EU, the prosecution would have to demonstrate that the sportscar market was distinct in itself.

              (In this case, the “mistake” is beneficial as I think you have made some good points that contribute to the discussion, that wouldn’t have otherwise emerged :) )

    3. A conflict of interest for sure, maybe not for the sale (makes sense to sell now) but maybe more so why they got allocated shares in the first place?

    4. WilliamB (@william-brierty)
      16th February 2017, 12:07

      As a certain demagogue is currently teaching us, blunderbuss defence can be considered as indirect verification of the allegations..

      1. Their tone is oddly reflective of that certain demagogue.

        However I suggest his actions are all blunders, so the act of blunder bussing does not confirm the allegation. Rather the rude attacks confirm they have no way to refute the allegations, which are therefore inferred as substantive.

        ; )

    5. I’m worried that I think I can see exactly why the FIA has issued this* – and why it is unlikely to help (especially given the wording of how the FIA has chosen to defend itself). But I don’t want to invite a lawsuit here in explaining it :(

      * – Note: I did not know the Economist had written on the subject until after reading the FIA response, and still don’t know what it wrote about it.

    6. 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.

      Surely as the administrator of the Sport, they should have knowledge of (as opposed to influence over) any bilateral arrangements as they may influence the governance of the Sport. Also as a minority shareholder of the CRH, shouldn’t they have knowledge?

      1. @nickwyatt In the Max Mosley/Concorde Agreement era then yes as Max was close to Bernie & the FIA were a part of the concord agreement.

        Since Jean Todt became FIA president he has distanced himself from that side of F1 & with each teams commercial arrangements with Bernie/CVC been done team by team (No single concord agreement style document anymore) with no FIA involvement & with Bernie & Jean Todt not exactly been that close then the details of the commercial arrangements has been outside of the FIA’s knowledge.

        That has actually been one of the biggest flaw’s of the FIA under Jean Todt, He’s had a very hands off approach & decided not to get involved in anything he see’s as outside of his/The FIA’s remit.

        1. @gt-racer I see. So if Todt was anxious to pursue this sort of ‘arm’s length separation’ perhaps he should have sold the FIA’s holding in the CRH when he first took office. Or perhaps he was too interested in the potential profit.

      2. Also, as people with an interest in the detail side of F1, one would have expected the FIA to at least have awareness that some of this information (it is unclear how much) about financial amounts is in the public domain – if only to help decide whether certain sporting decisions with financial consequences should be taken. (By the same token, FOM/Liberty would be expected to take an interest in public-domain FIA affairs, so they could make sure their commercial actions were compatible with regulatory reality). While it is true that the exact equations are a well-kept commercial secret, the eventual numbers are not.

    7. Easily fixed, FIA could disperse the commercial gains to the teams.

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