European parliament backs calls for F1 probe

The European Parliament has backed calls to launch an investigation into alleged anti-competitive practices in Formula 1.

Force India and Sauber lodged a complaint with the EU in 2015, with the two teams unhappy at the power granted to bigger outfits through the Strategy Group and the unequal distribution of revenue within F1. At present Mercedes, Ferrari, Red Bull, McLaren, Williams and the next highest-placed team in the constructors' championship sit on the Strategy Group, while the aforementioned five teams also all receive historic bonus payments each year.

The European Parliament produces a report each year in order to make recommendations for the European Commission's agenda on competition issues. In January, UK member of the European Parliament Anneliese Dodds submitted an amendment to the report, saying the parliament "calls for an immediate investigation into competition concerns arising from the Formula 1 motorsport industry."

With Dodds' amendment approved, on Tuesday the parliament voted through the report 467 to 156, with 86 abstentions. While the competitions commission is not duty-bound to act on the report, the vote in favor will greatly increase the chance of an investigation being launched.

"Smaller teams are unfairly punished by an uncompetitive allocation of prize money that will always give the biggest teams more money, even if they finish last in every race. The problems in Formula 1 extend well beyond the allocation of prize money, with serious concerns being raised about an agreement with HM Revenue and Customs that allowed the sport to pay an effective 2 percent tax rate."

The prize money allocation has been of concern to Dodds since Caterham and Marussia – both members of her constituency – first entered administration in 2014. Manor's collapse comes after the team earned an estimated $47 million in prize money last year, while Ferrari is believed to receive around $70m for being part of the world championship since its inception in 1950.

Dodds has also complained about a potential conflict of interest regarding F1's sale to Liberty Media, with governing body the FIA having to approve the sale but also standing to make substantial financial gain as a result of a 1 percent shareholding.

"There is also significant conflict of interest over the recent sale of the sport to Liberty Media, after the regulator received a $79.5 million profit from authorizing the sale," Dodds added. "I have written a number of letters to the European Commission calling for a full investigation and I am grateful that the rest of the European Parliament has added its voice to this call.

"We must ensure that we don't lose even more highly skilled jobs in this sector and allow a sport loved by 500 million fans to become increasingly less competitive."

Should an investigation be launched and F1 found guilty of anti-competitive practices, the European Commission can issue a fine of up to 10 percent of F1's annual turnover, which last year exceeded $1.3 billion.

Sauber team principal Monisha Kaltenborn recently told RACER the bilateral agreements between teams and the commercial rights holder – that led to the unequal revenue distribution – should be re-written "as soon as possible," stating her belief Liberty would not want to wait until they expire in 2020.