SEPTEMBER 8, 2000
The FIA and the European Commission
Understanding the battle between the international automobile federation and the European commission is not easy but it is a battle which could have enormous ramifications for the sport. In all probability, however, the squabbling will ramble on until the sport has transformed itself with rock-solid new contracts replacing old ones and some of the old practices have been shuffled quietly under the carpet.
The story dates back six years to 1994 when Max Mosley, who had recently become the FIA President, was in the process of restructuring the federation. He applied to the Competition Directorate of the European Commission for official clearance for the FIA's rule-making structure.
The competition directorate was headed by Belgian politician Karel Van Miert.
For nearly three years nothing happened but in 1997 a German television company called AE TV-Cooperations GmbH of Heidelberg complained to the commission about the FIA's decision to give Bernie Ecclestone the commercial rights to truck racing. A district court in Frankfurt, Germany, ruled that Ecclestone and the FIA were in breach of commercial clauses in the Treaty of Rome. The FIA cancelled the championship and appealed the decision.
Soon afterwards the competition directorate received another complaint from the Barth Peter Ratel organisation which had been organising an unofficial sportscar championship until the FIA revived its own series and gave the TV rights to Ecclestone.
The complaints coincided with Ecclestone's plans to float his motor racing companies on the London stock exchange. In order to do this he had to submit his plans to the competition directorate and after several months of investigation Van Miert announced that Ecclestone and the FIA were abusing a monopoly situation. The news was leaked to the press, which caused Mosley to open legal proceedings at the European Court of Justice in Luxembourg, asking for damages for the EU's meddling in the sport.
The major problem, even at this early stage, was that Molsey and Van Miert took a mutual dislike to one another when they first met.
The main problem was complicated by the fact that at the same time Formula 1 was in dispute with the European Commission over tobacco advertising and Mosley was at odds with Belgian politicians over the Grand Prix at Spa. Van Miert appears to have felt that Mosley's decisions regarding the Belgian Gp were actually attacks on him.
The disputes led to threats by the FIA to take Formula 1 out of the European Union and ultimately to a move of the federation's headquarters from Paris to Geneva.
The initial complaints soon faded away. The FIA won a resounding victory in its legal battle with AE TV and the Barth Peter Ratel problem disappeared when Stephane Ratel decided to work for the FIA. Jurgen Barth retired and Patrick Peter eventually withdrew his complaint.
Van Miert's investigation was not swift and in January 1999 Mosley launched a fiery attack on the competition directorate, saying that the delaying of decisions was causing the FIA damaging uncertainty. The attack coincided with the European Parliament in Strasbourg voting to censure the Commission over allegations of fraud and mismanagement. This led to the resignation of the entire Commission in mid-1999. The new commission did not start work until September and in the last few months in office Van Miert finally finished his "statement of objections" against the FIA. This was leaked to the press in July 1999.
The inquiry concluded that the FIA had abused its dominant position to restrict competition and that teams were forced to have FIA licences which could be cancelled if they competed in rival championships. Ecclestone was accused of having concluded contracts which infringed EU competition law and, according to the Commission, all the F1 TV contracts would need to be renegotiated.
In an aggressive statement the FIA responded by saying that it hoped that "a rational dialogue can be established with the new Commission" but if not then the disputes would have to be settled in the European courts "over the next three or four years".
The statement said that the EU would be "unable to find a single example of the FIA blocking another series, adding that the only complaint (from BPR) was a "dispute between partners in the BPR, two of whom wanted to run the FIA Championship".
The governing body attacked the Commission for the allegation that the FIA abusively acquires all TV rights to international motorsport events, saying that this "demonstrates a complete failure by the Commission to understand motorsport and television". The FIA pointed out that most motor racing receives no TV coverage at all and that it was "utterly ludicrous" to suggest that it forced F1 teams give up their TV rights because they had agreed to sell those rights in exchange for 47% of the gross TV income after lengthy negotiations over the Concorde Agreement.
It added that the accusation that it used licences to force rival championships out of business was "an absurd allegation" as teams which want to compete elsewhere form other companies to do so. The FIA said that the regulations in question had never been used and that the Commission ignored an FIA offer to delete them.
Van Miert left office in September 1999 and was replaced as Competition Commissioner by Italian Mario Monti. The Italian said that he wanted a quick solution to the dispute.
But nothing happened.
The FIA received an apology from the European Commission because of the leaking of confidential documents to the media and in December 1999 won a court case, the Commission being ordered to pay $39,000 towards the FIA's costs.
In February this year, in an effort to get the issue settled, Mosley launched another blistering attack on the Competition department in an open letter to Monti, accusing the commission of having "made a hopeless muddle of the facts" and saying that officials were "completely confused about the regulation and general functioning of motor sport."
Mosley said that the Commission has "no sustainable case in law" and went on to allege "illegal and improper conduct" by the director-general of the competition directorate, John Temple Lang, accusing him of "using the authority of his position to lobby and exert improper pressure on a sporting body on behalf of an outside business interest."
The accusation is based on contact between Temple Lang and Patrick Peter of BPR.
"This sort of thing would look bad in the darkest recesses of the Third World," Mosley told reporters. "We don't want special favours. We just want a rational and unbiased assessment of our case."
Mosley asked Monti to mount an independent investigation in the conduct of the Competition Directorate activities towards the FIA in the course of the last six years; to replace officials dealing with the FIA case with a member of the Commission's legal service; to stage a public hearing into the case and to give the FIA all documents relating to the case.
The European Commissioner's reaction was equally forthright.
"These attacks are totally baseless," he said. "His new criticisms have already been the subject of an internal enquiry which concluded that they were equally unjustified. The practises of the Commission over cases concerning competiton have always been to come to a decision based on the hard evidence. I can assure everyone that this will be the case for FIA."
The battle was due to come to a head in May with public hearings but before these happened Mosley made a number of proposals to Monti which he agreeted as being "innovative and constructive"
In an effort to solve the issues, Ecclestone agreed to sell the commercial rights to the World Rally Championship to David Richards and a deal was agreed with the FIA which saw Ecclestone agreeing a 100-year lease on the commercial rights in F1, in exchange for $360m. The argument was that a deal of such length cannot be anti-competitive as it is effectively the same as an outright sale.
So far there has been no public reaction from the European Commission but it is unlikely that the story is over yet.
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