By: Alison Booth
Edited by: Olivia Paik and Eliana Aemro Selassie
Sporting leagues exist on a narrow plane between colluding monopolies and competitive industries. A level of collusion is essential to limit the scale of the organizations to feasible competition. However, this blurry line has been a recent cause of controversy in motorsport as Congress questions the authority of Formula One management to limit the number of teams in the series, a possible violation of the Sherman Antitrust Act of 1890.
The pinnacle of motorsport is commonly agreed to be the Formula One series. In the league, 20 single-seater cars from 10 teams race over 24 weekends of the year across the world. Notably, three of these races occur in the United States.
Yet, none of the ten teams exists independently of European influence. Each team has three major components: their two drivers, the home base where they build the bulk of the car, and their power unit supplier. Some teams both build their car and power unit; however, smaller teams rely on outside power unit manufacturers. One of the ten teams, MoneyGram Haas F1 Team, is based in North Carolina. Nonetheless, neither their drivers nor their power unit are American-based.
However, an American name, Andretti Global, has been looking to disrupt this space. The team, which competes in other motorsport leagues, began to build a Formula One-style car and factory. Originally, they were advised to purchase the rights to an existing team, but when attempts to buy Stake F1 Team Kick Sauber fell through, Andretti initiated an application to be the eleventh team to the Fédération Internationale de l'Automobile (FIA), the regulating body of many motorsport series. In October 2023, the FIA accepted their application. [1]
But, the tune flipped in January 2024 when Formula One management rejected the bid, citing concerns around competitiveness. [2] The management arm which rejected the bid is primarily the commercial arm of the series. Concerns centered around the value Andretti would bring to the series.
If Andretti were to enter for the 2025 season, they would have to enter into a partnership with the shrinking pool of engine suppliers. The 2025 season is already set to lose one manufacturer due to poor performance, down to three groups supplying the grid of ten teams. Formula One management suggested that entering with an engine supplier, General Motors, could bring sufficient value to support a new team’s entrance. [3]
Such a stipulation is not feasible for both a timely entry and competitive status for Andretti Global. With the options shrinking for 2025 to only three possible suppliers and the infeasibility of General Motors producing a competitive engine, Andretti lacks realistic options.
The rejection elicited concern among Congressman John James of Michigan, as General Motors, a Michigan-based company, is being restricted from market participation. James claims not wanting to split profits is the central motive behind the rejection by the commercial arm. [4] James cited concerns around the use of American markets while rejecting American corporate participation in a letter to Greg Maffei, the CEO of Liberty Media which owns the rights to the commercial arm of Formula One. [5]
James, in coordination with 11 other members of Congress, sent a letter to Maffei citing the fact that up to 12 teams may participate in the Formula One World Championship, and membership ought to be based on merit. [6] They posed questions about the authority of Formula One management to reject Andretti after acceptance by the FIA, a possible violation of the Sherman Antitrust Act of 1890, and the role of General Motors’ intentions to sell Cadillac brand cars in Europe, competing with existing Formula One commercial car manufacturers. [7]
A second letter from the House of Representatives Committee on the Judiciary sent to Liberty Media requested documents in relation to the rationale behind restricting Andretti Global’s entrance into Formula One. The Committee on the Judiciary acknowledged the necessity of a level of collusion in sports but cited the essential requirement of maintaining competition. Collusion ensures the competition remains at a manageable and competitive level without excessive or poor teams. Many current Formula One teams do not meet the criteria, an ability to compete for top three placements, required of Andretti Global. [8] Liberty Media may have broken antitrust law to maximize prize money for existing teams and protect weak teams.
The Sherman Antitrust Act is a federal statute generally prohibiting activities that restrict interstate commerce. [9] The act serves to prevent and penalize monopolization. More recently, the Clayton Antitrust Act outlined more specific details to bolster the Sherman Act. [10] Congress requested that the Department of Justice investigate (DOJ) Liberty Media’s Formula One Management, and the DOJ has begun an investigation into possible violation of the Sherman Antitrust Act. [11] The DOJ investigation is ongoing, but if Liberty Media can prove Andretti will not bring value to the series, they have a strong case for their rejection of the team. Moving forward, all eyes will be on Liberty Media to see if Andretti Global is allowed to proceed with the proposition to add an additional team or if Congressional pressure will be necessary. Moving forward, the expansion or limitation of American owned teams could be central to the growth of motorsport in the United States.
Notes:
1. Hunt, Ben. “Andretti F1 Plans Unchanged after Ownership Switch.” Motorsport Network, 10 Oct. 2024, www.motorsport.com/f1/news/andretti-f1-plans-unchanged-after-ownership-change/10661970/.
2. Hunt, “Andretti F1 Plans Unchanged after Ownership Switch.”
3. Edmondson, Laurence. “Why F1 rejected Andretti bid to join the grid for 2025, 2026.” ESPN, 31 Jan. 2024, https://www.espn.com/racing/st.
4. Klinefelter, Quinn. “There’s an ongoing battle happening at the highest level of motor sports.” National Public Radio, 15 July 2024, https://www.npr.org/2024/07/15/nx-s1-5035489/theres-an-ongoing-battle-happening-at-the-highest-level-of-motor-sports.
5. Brown, Nathan. “Liberty Media under investigation over anti-trust violations after denying Andretti F1 bid.” Indianapolis Star, 9 Aug. 2024, https://www.indystar.com/story/sports/motor/2024/08/09/liberty-media-us-department-of-justice-investi
6. Brown, Nathan. “Liberty Media under investigation over anti-trust violations after denying Andretti F1 bid.” Indianapolis Star, 9 Aug. 2024, https://www.indystar.com/story/sports/motor/2024/08/09/liberty-media-us-department-of-justice-investiga
7. Brown, “Liberty Media under investigation over anti-trust violations after denying Andretti F1 bid.”
8. Brown, “Liberty Media under investigation over anti-trust violations after denying Andretti F1 bid.”
9. Wex Definitions Team. “Sherman Antitrust Act.” Cornell Law School Legal Information Institute, June 2022, https://www.law.cornell..
10. Wex Definitions Team. “Clayton Antitrust Act.” Cornell Law School Legal Information Institute, July 2022, https://www.law.cornell.edu/wex/clayto.
11. Klinefelter, Quinn. “There’s an ongoing battle happening at the highest level of motor sports.” National Public Radio, 15 July 2024, https://www.npr.org/2024/07/15/nx-s1-5035489/theres-an-ongoing-battle-happening-at-the-highest-level-of-motor-sports.
Bibliography:
Hunt, Ben. “Andretti F1 Plans Unchanged after Ownership Switch.” Motorsport Network, 10 Oct. 2024, www.motorsport.com/f1/news/andretti-f1-plans-unchanged-after-ownership-change/10661970/.
Edmondson, Laurence. “Why F1 rejected Andretti bid to join the grid for 2025, 2026.” ESPN, 31 Jan. 2024, https://www.espn.com/raci.
Klinefelter, Quinn. “There’s an ongoing battle happening at the highest level of motor sports.” National Public Radio, 15 July 2024, https://www.npr.org/2024/07/15/nx-s1-5035489/theres-an-ongoing-battle-happening-at-the-highest-level-of-motor-sports.
Brown, Nathan. “Liberty Media under investigation over anti-trust violations after denying Andretti F1 bid.” Indianapolis Star, 9 Aug. 2024, https:/
Wex Definitions Team. “Sherman Antitrust Act.” Cornell Law School Legal Information Institute, June 2022, https://www.law.cornell.edu/w.
Wex Definitions Team. “Clayton Antitrust Act.” Cornell Law School Legal Information Institute, July 2022, https://www.law.cornell.edu/wex/clayton_antitrust_act.
