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European parliament backs investigation into F1

Peter J Fox/Getty Images

The European parliament has thrown its support behind calls for Formula One to be investigated for allegations of anti-competition practices.

The European Union has been looking into F1 since Force India and Sauber lodged formal complaints about the sport's system of governance and allocation of prize money in September 2015. Both teams have been long-term critics of the decision-making Strategy Group, which involves the six biggest teams and controversially blocked the implementation of a budget cap in 2014, and the uneven distribution of F1's wealth.

In January a report was produced by the European parliament aimed at making a recommendation for the European Commission's agenda, which could lead to the competitions commission to investigate F1's governance and payment structure. Anneliese Dodds, a UK member of the European parliament, submitted an amendment to the report calling for "an immediate investigation into competition concerns" in F1.

On Tuedsday, the amendment was passed by 467 votes to 156, with 86 abstentions. The commission has no obligation to launch an investigation but the overwhelming vote in favour will be seen as significant pressure to do so.

Dodds, a long time advocate of an investigation, has said her main gripe with F1 is that the biggest teams receive more money than the smaller teams, regardless of where they finish in the championship. Ferrari, for example, received £105 million last year just in bonus payments before a wheel had even been turned -- £35 million as a constructor bonus and £70 million owing to the historical bonus it receives for being in F1 since its first season in 1950.

That historical bonus alone is more than the amount Manor received in total for the 2016 season (£45 million). Manor -- who had been based at Banbury, in the UK's 'Motorsport Valley', which accounts for around 40,000 jobs overall -- fell into bankruptcy at the start of this year before folding completely ahead of the new season.

Dodds says Manor's failure highlights deep-routed problems in Formula One.

"I'm happy that today the European Parliament backed my call for a full and immediate investigation into anti-competitive practices in Formula One," she said. "A few weeks ago Manor Racing became the latest team in the south east of England to collapse after administrators failed to find a buyer.

"Smaller teams are unfairly punished by an uncompetitive allocation of prize money that will always give the biggest teams more money, even if they finish last in every race. The problems in Formula One extend well beyond the allocation of prize money, with serious concerns being raised about an agreement with HM Revenue and Customs that allowed the sport to pay an effective 2 percent tax rate."

Dodds went on to say there are also concerns about F1's recent sale to Liberty Media and whether the FIA benefited financially -- the governing body cashed in its one percent stake in F1 when previous owners CVC Capital Partners agreed to sell the sport last year.

"There is also significant conflict of interest over the recent sale of the sport to Liberty Media, after the regulator received a $79.5million (£63.7m) profit from authorising the sale. I have written a number of letters to the European Commission calling for a full investigation and I am grateful that the rest of the European Parliament has added its voice to this call.

"We must ensure that we don't lose even more highly skilled jobs in this sector and allow a sport loved by 500million fans to become increasingly less competitive."

If the commission decides to investigate Formula One and finds the sport guilty of anti-competitive practices it can issue a fine of up to 10 percent of its annual turnover -- currently around £1.35 billion.