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EU threat to F1 flotation

Commission voices concern over broadcasting contracts that exclude screening other car races
Racing supremo Bernie Ecclestone's bid to gain European Commission support for his planned flotation of Formula One Holdings seems set to backfire, amid concern that his Grand Prix contracts with broadcasters break EU competition rules.

Senior Commission officials said this week there were serious doubts over the legality of the web of agreements that FOH has with 60 television companies worldwide to broadcast Grand Prix racing - a key source of revenue for FOH. "The European Commission has a series of real questions and real worries," warned one.

The Commission has powers to force Mr Ecclestone to disband the agreements, some of which are for 10 years, if it believes they go contrary to article 85 of the EU's Treaty of Rome, which forbids anti-competitive contracts.

If the Commission did that, it would be a slap in the face for Mr Ecclestone, who voluntarily submitted the contracts to it last July for review to remove any doubts that could endanger the flotation. Any legal doubts surrounding the business of Formula One would deter investors from buying shares and diminish the value of the company.

The Commission is worried in particular about broadcasting agreements that give certain television companies a 33 per cent discount from the fees each pays if the broadcaster does not show any other car races. This, officials say, could discriminate unfairly against competitors.

Mr Ecclestone meanwhile remained confident that the Commission would give the FOH float a green light. "A lot of people don't want to ask (the Commission) because they think what they are doing might be illegal. We are quite sure we aren't breaking the law," Mr Ecclestone said. He added his lawyers were "in hourly contact" with Brussels and that he was reassured by what the Commission was telling him.

"They have been so good and so helpful I can't believe it. They have been really super. They know we want to get a flotation."

With regard to the Commission's concerns over discounts for broadcasters who give no coverage to competing motor races, Mr Ecclestone commented: "If you are a broadcaster and you broadcast Baywatch, you are not going to show a similar programme."

Mr Ecclestone said the flotation would go ahead once the Commission had reached a verdict. "The day the Commission says to us what you are doing is fantastic, we will immediately go to the market," he said.

The Commission has no time limits imposed on its investigation. It is currently waiting for interested third parties to submit their comments on the case.

Should the Commission and Mr Ecclestone clash, the motor racing supremo is unlikely to get help from the Government following the recent revelation that the Labour Party was seeking a second pounds 1m donation from him.