What does the EU Commission's F1 interest mean?

Nowhere do the wheels of administration turn slower than in Brussels. Look no further for proof than the European Commission's investigation into Microsoft's control of the internet browser market.

From the first call for files to handing out the final fine took almost decade, yet that is not even the entire timeline. The first complaint was submitted seven years earlier, so with appeals and counter hearings, the process took almost two decades.

In the end the EU got there, with the software giant being fined a whopping $731m for abusing its dominant position. Thereafter the Office of the Commissioner for Competition announced it had set its sights Google's search engine.

From the day a first complaint was registered, that decision to look into its impact on competitors took almost five years, during which period the Office underwent a change of commissioners.

Indeed, without the reshuffle of commissioners it is doubtful whether the antitrust investigation - formally announced in April this year - would have reached the formal complaint stage, officially known as a Statement of Objections.

Simultaneously it emerged that the commissioner is also considering investigations into Google's conduct with its Android smartphone operating system, a process still in its formative stages.

Thus, when it was announced in November last year that Formula 1's governance and revenue structures had been brought to the attention of Ms Margrethe Verstager - the incoming Danish commissioner, replacing Spain's Joaquin Almunia (2010-'14) - by British Labour MEP Anneliese Dodds, those who expected quick-fire guilty judgements were surely disappointed. The fact is these processes take years. If not decades.

MEP Anneliese Dodds visited Force India's Silverstone HQ last week © XPB

F1's previous brush with the EU came after a truck-racing promoter registered a complaint in 1998 over the total FIA championship monopoly granted F1 impresario Bernie Ecclestone by the then-Max Mosley-led administration. Those with knowledge of that case will know the issue took over three years to settle.

The latest salvo in the current situation was fired last Friday when Ms Dodds visited Force India for a site inspection and discussions with management. Her office issued a statement that made it clear that the MEP had done her bit, and that any further action was up to the teams.

"I've raised this issue [F1's governance and revenue distribution] a number of times in Brussels, to see if there is a competition case to answer here. The commissioner in charge [Verstager] has made it clear to me that she can't do anything until the teams themselves submit a formal complaint, and so if that's what the teams feel is right then that is what they should do," her statement read.

At first sight this appears to be a classic case of expedient buck-passing by a politician, but it is simply another step on the long road to some form of verdict. And, forget not, no decision that there should be no investigation into F1's structures has (yet) fallen (see below).

Asked for comment by this writer, Dodds's office made clear the MEP's involvement is far from over, with her political officer telling AUTOSPORT: "Anneliese has made clear that she would be happy to support [the teams] in whatever way they would like when it comes to raising the issue with the Commission (without, of course, prejudging the outcome of any investigation).

"That offer still stands, so Anneliese does not see her role in this matter as necessarily being at an end."

In fact, correspondence seen by AUTOSPORT indicates that Dodds is extremely concerned about the overall situation, with one paragraph of a letter to the commissioner reading:

The plight of Caterham and Marussia in 2014 heightened conerns © LAT

"As I made clear both in my original letter, and in our discussion on 25 November [2014], I believe that there is a genuine issue to be investigated in relation to Formula 1 and the FIA.

"It is an issue that extends beyond just sports policy because of the very real impact that a potential regulatory or commercial abuse within the sport can have on R&D investments in car manufacturing. As I explained, this has already resulted in two firms in my constituency having to close, with associated job losses."

The Head of [Competition] Unit in the Office of the Commissioner replied as follows:

"The Commission monitors possible anticompetitive market practices and abusive conduct. This includes behaviour by operators active in the sports sector. We are aware of the recent allegations regarding Formula 1's governance, as described in your letter and the recent press reports."

That some form of investigation - even if only cursory - is warranted became abundantly clear after this writer delved into the subject back in 2012, with the bottom line being that there could well be an abuse of a dominant position via Formula One Management's conduct as sole purchaser of Formula 1 services from teams.

Not only does that 2012 column provide full insight into FOM's background to the situation, but also details the outcome of the EU's previous investigation into F1 and the FIA. In her correspondence to the commissioner, Dodds specifically refers to the initial investigation, in particular the findings published on June 13, 2001, which state:

"The modified Concorde Agreement (note) establishes the organisational structure of the FIA Formula 1 Championship and provides for the commercial arrangements aiming at marketing the series. As motorsport and especially Formula 1 is a particularly complex technical activity requiring important investments in technological research and development, it is indispensable for all [emphasis added] participants to agree on the way the series are organised."

However, no Concorde Agreement currently exists. And teams cannot agree on the way the championship is organised - due to the make-up and powers of the Strategy Group, which excludes half the grid. The EU's Competition Commission's website perfectly encapsulates the dominance criteria:

The Strategy Group includes some teams and not others © LAT

"Market shares are a useful first indication of the importance of each firm on the market in comparison to the others. The Commission's view is that the higher the market share, and the longer the period of time over which it is held, the more likely it is to be a preliminary indication of dominance. If a company has a market share of less than 40 per cent, it is unlikely to be dominant.

"The Commission also takes other factors into account in its assessment of dominance, including the ease with which other companies can enter the market - whether there are any barriers to this; the existence of countervailing buyer power; the overall size and strength of the company and its resources and the extent to which it is present at several levels of the supply chain (vertical integration)."

FOM has a 100 per cent share and total vertical integration, from commercial rights control through TV production to hospitality and signage. Indeed, its tentacles stretch so far it had designs on control of all media accreditation.

By extension, European consumers (F1 fans) would seem to be disadvantaged by virtue of the fact their chosen sport (and, by extension, the teams) are discriminated against by FOM's structures. That the subsequent failures of Caterham and Marussia-Manor (both alluded to in Dodds's correspondence, above) simply underscore what is clearly a desperately inequitable situation.

The extremely concerning financial predicaments of Lotus (currently subject to a winding-up petition), Force India (whose 2015 chassis was materially delayed earlier amid financial wrangles) and Sauber (forced to sign four drivers for two cockpits simply to stay alive) indicate that the underlying issues are far from over. It adds further impetus to the need for - at the very least - demands for information.

But, if Dodds remains supportive of the teams, she (and commissioner Verstager) are incorrect in stating that formal complaints from teams are required for what is known as an Article 102 case (named after the provision in the original Treaty of Rome harking back to 1957) to proceed. The Commission's procedures make clear that any EU citizen may register a formal complaint, subject to following the correct procedures.

Equally, as outlined in that 2012 column, the Commission may open what it terms "own-initiative investigations", if it suspects any organisation to be in breach, but such initiatives are few and far between, with both the Microsoft and Google cases (and, for that matter, the original EU investigation into F1) originating through officially-registered complaints by individuals or commercial entities.

Lotus, Force India and Sauber have all encountered financial difficulties © LAT

Thus far, as confirmed to AUTOSPORT by Ricardo Cardoso, spokesman for Competition: "The Commission has not received any formal complaints and cannot confirm an investigation at this stage." This does not simply mean no complaint will be considered when and if lodged - although many may well interpret the situation that way.

When questioned in Austria by this writer whether he was concerned about possible EU intervention given that Ferrari enjoys Strategy Group status, receives by far the largest slice of F1's revenues and is heading for an IPO, FIAT CEO Sergio Marchionne, simultaneously Ferrari president and a trained lawyer, said:

"No, I think we need to be careful. These things are incredibly clear deals, they are evident and they have been publicised.

"I'm a lawyer by training and I really see very limited scope for commission intervention. If it happens, we'll deal with it but I doubt very much that it will go very far."

When pushed, he admitted he was no longer a practicing lawyer, but surely understands his three stated criteria - namely clarity, evidence and public knowledge - are not necessarily the same as those applied by the commissioner. Indeed, possibly the opposite...

Where to now? Clearly the ball is in the court of the three teams (four, if Manor chooses that path), and it is up to them to decide whether to proceed, either individually or collectively.

They have an ally in Dodds; have all the facts; have every reason to register a complaint given their futures (and those of thousands of employees, within teams and suppliers), are on the line; and have an EU Commission open to formal complaint.

The flip side is that the cash-strapped teams may fear some form of repercussion should their complaint not be upheld. Indeed, when Dodds's first efforts became public knowledge, one Strategy Group team principal went as far as suggesting that the commercial rights holder may choose to suspend payments to teams pending the outcome of any investigation.

Given that it is the premium payments (only) that are contentious these may well be suspended under those circumstances - hence his concern - but surely FOM would not freeze routine performance payments to complainants purely as an act of revenge. That would surely fuel flames in Brussels - the heat of which can be attested to by Microsoft, which initially did not take the EU process seriously, later paying a massive price - apart from being illegal.

With EU able to fine entities up to 10 per cent of total turnover, and empowered to investigate all agreements and parties - from F1's holding company Delta Topco through FOM and all teams - fine totals could run to billions. Particularly if the commissioner goes for the jugular and levies fines on annual turnovers of parent companies such as Daimler, Red Bull, FIAT and CVC Capital Partners, majority owner of Delta Topco.

The trigger could be a simple complaint.