Lawyers dash F1 competition concerns


Comments have recently come to light which have been given unnecessary exposure and whilst we don't want to contribute to that several high profile lawyers have come forward with views which hopefully clear things up.

The comments concern the deals offered to F1 teams in the 2013 Concorde Agreement, the contract which commits them to race and governs the terms of their involvement with the sport. The current contract expires at the end of this year and the new one is set to run from 2013 to 2020. The terms have been agreed separately with all teams, except Marussia, though the final contract has yet to be signed.

As Pitpass' business editor Christian Sylt revealed back in May, the teams have received a cash windfall of 115m for agreeing to sign up to the new agreement. The impact of this has already been felt as, for example, Williams' revenue for the first half of 2012 increased 57% to 73m driven by the new deal.

Financial bonuses aren't the only incentives under the new contract. Amongst other benefits, Ferrari, McLaren and Red Bull also get the right to appoint non-executive directors to the board of F1's Jersey-based parent company Delta Topco. Ferrari's chairman Luca di Montezemolo was appointed to the board on 22 March this year and as he represents the longest-standing team in F1 he also took up places on the sport's audit and ethics committee, remuneration committee and nomination committee. The Red Bull affiliate director and the McLaren nominee will be appointed on or after 1 January.

There is more. As Sylt reported in May, there are further financial bonuses for what are known as the 'CCB Teams'. They are described in the prospectus for the stalled flotation of F1 as "each of the top three teams determined based primarily on Events won in the four seasons prior to 2012." To cap it all, the prospectus reveals that if F1 proceeds with a stock market flotation di Montezemolo is due to receive options over 0.25% of its shares.

The benefits offered to certain teams prompted one observer to claim "there's a strong case that an unequal division of power and money to a subset of teams is unlawful." Reportedly, they are not convinced that F1 "is organized with the right principles of fair competition" and thinks the European Commission should examine the terms promised to Ferrari and Red Bull. Several senior lawyers seem to disagree with this view.

Charles Braithwaite, media and sports lawyer from Collyer Bristow says "on the basis that Ferrari is not taking a controlling stake, competition law is unlikely to be relevant and the other teams are unlikely to be successful in making a related claim for anti-competitive behaviour to the European Commission."

Paul Stone, sports and media partner at law firm Charles Russell adds "it's not that unusual for teams to have an ownership stake in the body that exploits the commercial rights associated with their league or tournament. For example, the Premier League is owned by its 20 member football clubs. So a minority stake held by one of the Formula One teams in itself is unlikely to give rise to competition law concerns."

Braithwaite adds "if Ferrari were to have someone appointed to the board, that person would be unlikely to be considered 'independent'. However, that doesn't necessarily mean they can't be appointed. The board may judge that an individual has the strength of character and integrity to remain impartial and not compromise their independence." Measures have been introduced to ensure that this happens.

The prospectus states that "various safeguards have been put in place to ensure that no team is unduly advantaged in commercial negotiations with the company by virtue of having a team associated director or team director on the board."

It adds that "neither a team director nor a team associated director has any right to: (a) receive or inspect any papers, documents, records or other materials of the company, any subsidiary of the company or of any other director which in any way relate to the company'' relationship with any team (including, without limitation, any payments to or from, or dealings or arrangements with, or proposals or requests from, or for the benefit of, any team or any person acting on behalf or associated with a team, and specifically including anything involving or related to any team arrangements...(b) attend or participate in any part of any meeting of the board of directors or a committee thereof which considers a team related matter, nor speak or vote on any resolution concerning a team related matter; or (c) ask questions about any team related matter."

In summary, the team representatives will not be involved with decisions which could advantage them or disadvantage their rivals. They are nothing but non-executive directors and this alone should help them avoid conflicts of interest.

Article from Pitpass (

Published: 13/12/2012
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