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DECEMBER 22, 1997

More meddling from the EU

THE European Union is making life difficult for Grand Prix racing at the moment and there are signs that this could lead to another showdown between the authorities in Brussels and Grand Prix racing bosses. A compromise was reached over the banning of tobacco advertising in the European Union after Formula 1 threatened to scale down the number of races in Europe but an investigation into Bernie Ecclestone's Formula 1 Holdings by the EU Competition Commissioner Karel Van Miert could lead to more trouble.

Van Miert has been asked to rule on whether Ecclestone's deal with the FIA to exploit all the commercial rights associated with Grand Prix racing is anti-competitive. This question must be resolved before Ecclestone can float Formula 1 Holdings on the stock exchange.

On Saturday he was quoted in the Belgian newspaper Belang van Limburg saying that "Mr. Ecclestone has had F1 to himself now for 15 years. We have to set things right. A number of rulings are in the pipeline."

These comments do not make much sense as Ecclestone has only been running F1 as a private business for the last couple of years, prior to that he was working as a representative of the F1 teams.

The Belang van Limburg reported that Ecclestone was given the rights to exploit F1 commercial matters 15 years ago. This is completely inaccurate as Ecclestone's 15-year deal with the FIA was only signed at the end of 1995. To prepare for the flotation, however, Ecclestone wants the deal extended for another 10 years - to the end of the year 2020. The FIA is willing to grant him such a deal - in exchange for a sizable amount of money and shares in the floated company.

In a recent interview FIA President Max Mosley said that the FIA wants "substantial benefits". "The ideal situation would be to have shares but also to have a lump sum of cash at the beginning of the deal so that the FIA is all right whatever happens to Formula 1," Mosley said.

There is no question, however, that the FIA wants FOH to be floated. "It will be better if the commercial side of the business is run by a public company rather than an individual," said Mosley, "simply because F1 is so big and there are such big companies now involved."

Van Miert could insist that any deal between the FIA and Ecclestone be modified or even canceled - which could have a detrimental effect on the flotation.

Ecclestone and the FIA do not, of course, have to abide by European Union laws if they choose to operate outside the EU. If Van Miert's decisions are too radical we would expect to see the FIA threaten to withdraw from the EU completely. There is no shortage of places around the world which want to host Grands Prix.

"At the moment F1 is still very much a European sport," Mosley says, "but the EU has only 12% of the TV audience now and, to some extent, the future lies outside the EU."