Last week, the Director-General of the OFT published his reasons for recommending that the Secretary of State should refer to the Competition Commission the acquisition by The Interpublic Group of Silverstone from the British Racing Drivers’ Club. It now appears that had more time been available to negotiate appropriate undertakings, the merger (which sees the major Brands Hatch and Silverstone circuits coming under common ownership) might not have been referred at all.
Under the Fair Trading Act, referral to the Competition Commission can only take place within a four month period which runs from the time when the completed transaction has been made public. The Director-General’s published advice makes it clear that concerns raised about this merger may either have proved illusory or leant themselves to remedy by undertakings had this deadline for referral not have been about to expire.
This particular observation on timing constraints was made in relation to the preponderant shareholder interest that Interpublic (through its ownership of Brands Hatch and Silverstone) will enjoy in the British Motor Sport Promoters Limited – the body which allocates races to circuits and promotes them in the UK. The major objection to the merger from the competition policy perspective was not therefore the common ownership of Brands Hatch and Silverstone in itself, but that by its control of British Motor Sport Promoters Limited, Interpublic (now renamed Octagon Motor Sports Limited) could block the allocation of events to competitors, such as Donington and the minority independent circuits.
The referral shows that markets are defined quite narrowly by the regulators when examining sports markets and that those who both operate circuits and promote races (and therefore have a foot in both camps giving rise to potential conflicts of interest) are considered to be in a strong position to adversely restrict access of independent third parties. This preliminary analysis clearly reflects the position taken by the regulators in relation to Ecclestone’s position in Formula One and to BskyB’s position as a league broadcaster and (potentially) the owner of Manchester United. Although this particular merger will surely be allowed to proceed (subject to undertakings designed to “ring fence” decisions on the allocation of events from the control of owners of Brands Hatch and Silverstone), it will be very interesting to see in how much detail the Competition Commission further articulates the concern about the anti-competitive potential of conflicts of interest in sports markets.