Motorsport’s monopolies under the microscope

Liberty Media, owner of the Formula 1 Group and holder of the exclusive commercial rights for the FIA – Fédération Internationale de l'Automobile Formula One World Championship, and Dorna Sports, holder of the exclusive commercial rights for the MotoGP™ motorcycle racing championship, were dealt a blow yesterday (19 December 2024) as the EU’s antitrust regulator, the European Commission, announced that it has opened an in-depth, Phase 2 merger investigation into the proposed acquisition of the latter by the former.

The Commission has preliminary concerns that the transaction could lead to higher prices for the licensing of broadcasting rights for motorsports events hosted by both parties. The transaction raises serious competition concerns in potentially narrow national markets for the licensing of broadcasting rights for motorsports content, where Formula One is the clear market leader in all European countries and MotoGP is most often its only competitor.

Is this a case of history repeating itself? Those with longer memories will recall that when global private equity fund CVC purchased Formula One in 2006, it was made to divest MotoGP to address the European Commission’s concerns that one company owning the two most popular motorsport events in Europe would lead to higher prices for TV rights and leave customers with less choice. At the time, the Commission was worried that the deal would significantly reduce competition for the sale of TV rights to events in Italy and Spain, where the sports were particularly popular. The regulator was also concerned that in countries where MotoGP was less popular than Formula One, CVC might bundle the TV rights for both events.

Liberty Media argues that the market has changed significantly since 2006. It says that the new generation of pay-TV broadcasters and streaming services aren’t dependent on motorsports, as they have a host of other sports able and willing to fill their broadcasting schedules. Nonetheless, evidently the Commission is not (yet) convinced - F1 and MotoGP arguably remain each other’s closest substitute, and the regulator is seeking to test whether Liberty would be able to exploit broadcasters’ increased dependency on the conglomerate to negotiate more favourable terms. It’s particularly notable that this is currently the only Phase 2 merger investigation on the Commission’s docket.

The Commission’s in-depth investigation comes hot on the heels of allegations, brought by former basketball star Michael Jordan’s 23XI Racing racing team, that the US National Association for Stock Car Auto Racing (NASCAR) holds monopoly power in the market for premier stock car racing teams in the US, with such power being maintained through anticompetitive agreements, acquisitions and non-compete restrictions. The antitrust lawsuit accuses NASCAR of violating Section 2 of the Sherman Act by engaging in wilful anticompetitive conduct to maintain a “monopsony over the relevant market for premier stock car racing”. It also alleges that NASCAR violated Section 1 of the Sherman Act by entering into exclusive dealing agreements with the owners of premier racetracks and imposing “anticompetitive and abusive contract terms” on racing teams, including non-compete restrictions. Earlier this week a US judge granted the claimants a preliminary injunction against NASCAR.

These latest interventions only highlight the seriousness with which both the US and the EU view potential monopolistic practices in sports, and are representative of a growing trend regarding the application of competition law to sport.

Anand Patel is a competition/antitrust and regulatory lawyer with over 10 years of experience advising on competition law and compliance issues, the drafting of rules and regulations, and disputes.