The United States Congress has made overtures to Liberty Media over the question of why Andretti Global’s entry into Formula 1 has been rejected.
A bipartisan letter spearheaded by Rep. Jim James (R-Mich.) but also signed by Reps. Jim Jordan (R-Ohio), Jared Moskowitz (D-Fla.) and Dan Kildee (D-Mich.) asked three questions about the efforts by Michael Andretti and General Motors to secure a place on the Formula 1 grid.
Formula One Management rejected the Andretti bid earlier in the year with an argument that reasoned that positive commercial impact on the league was not demonstrated. It argued that the difficulty of starting a new team from scratch, without a works program, “would be damaging to the prestige and standing of the Championship,” and that Andretti would benefit more from F1 than vice versa.
Andretti, however, has the full support of General Motors, who plans to enter the series with the team under the Cadillac brand but wouldn’t have an engine prepared for competition until 2028. Andretti had hoped to enter sooner, as a customer team, to prepare its infrastructure upon the arrival of new engine regulations.
“We would look differently on an application for the entry of a team into the 2028 Championship with a GM power unit, either as a GM works team or as a GM customer team designing all allowable components in-house. In this case there would be additional factors to consider in respect of the value that the applicant would bring to the Championship, in particular in respect of bringing a prestigious new OEM to the sport as a PU supplier.”
Formula One Management in letter of rejection to Andretti
Perceived or legitimate, the perception is that the current teams that compete in Formula 1 are simply not inclined to further split their revenue pie with a new entrant but that General Motors is affiliated with Andretti and Group1001 suggests it would be additive to that figurative pie.
That Liberty Media, which owns Formula One Management, is what led to the inquiry from Congress to CEO Greg Maffei.
We write to express our concerns with apparent anti-competitive actions that could prevent two American companies, Andretti Global and General Motors (GM), from producing and competing in Formula 1,” the letter outlined.
Last year, the Federation Internationale de l’Automobile (FIA), the sole and independent arbiter of entry into Formula 1, approved Andretti Global to enter Formula 1 racing starting in 2026. However, despite FIA’s approval of the Andretti Global partnership, Formula One Management (FOM), the commercial rights holder owned by Liberty Media Corporation, rejected Andretti Global’s admission.
FOM’s rejection appears to be driven by the current line-up of European Formula 1 race teams, many of which are affiliated with foreign automotive manufacturers that directly compete with American automotive companies like GM.
It is unfair and wrong to attempt to block American companies from joining Formula 1, which could also violate antitrust laws.
Congressional letter to Liberty Media
The letter was dated May 1 and seeks a response by May 3, Friday, or the end of the week. It asks how the rejection of Andretti Global complies with antitrust laws in the United States and what influence the existing teams and their OEMs had in that decision.
It’s worth noting that while owned by Liberty Media, FOM is registered and operated out of the United Kingdom.
Effectively, all teams must sign off on the addition of new teams in addition to the FIA, and only the latter has approved the entry.
Liberty Media, itself, seemed to be aware of the potential of the status quo inviting a conflict under competition laws based on its own 2021 annual report.
Formula 1 is also required to comply with general European Union and national competition laws, which require Formula 1 at all times to ensure its business practices and agreements are consistent with the operation of competitive markets.
Failure to comply with the relevant practices, terms, laws and rules can give rise to challenges by the [European Commission], national competition regulators and other interested parties.
In addition, they could cause or deem certain of Formula 1’s commercial contracts (including the Team Agreements) to be unenforceable in whole or in part and/or require various terms (including duration, scope and exclusivity) to be modified, and/or Formula 1 could be liable for damages or other sanctions.
Formula 1 has sought to adopt practices and conclude commercial contracts that take into account competition law as it applies to the specific nature of Formula 1’s sporting and entertainment businesses, Formula 1’s role within those businesses and the roles of the counterparties to Formula 1’s commercial contracts.
However given the uncertainty of the law in this area, and the possibility of third parties instigating action, there is a risk of further EC investigations, challenges or proceedings against Formula 1.
For example, two Teams made a complaint against Formula 1 to the EC in September 2015 regarding the distribution of the Prize Fund and current sporting governance arrangements (though Formula 1 rejected the complaint as being without merit and believed it was in any event, a commercial dispute and not one that involved any breach of competition law). “Although this particular complaint was withdrawn by the two Teams in early 2018, for the reasons set out above, no assurance can be given that there will be no future EC investigations, challenges or proceedings regarding unasserted matters.”
2021 Liberty Media annual report
Nevertheless, the inquiry from the United States Congress is likely to be nothing more than a headline generator as these matters ultimately fall under the jurisdiction of the European Commission.
For its part, Andretti recently cut tape on a brand new race shop near Silverstone Park and still plans to race in 2028 with General Motors with a package it hopes is undeniable.
Matt Weaver is a Motorsports Insider for Sportsnaut. Follow him on Twitter.