Formula One chiefs and Commission face head-on collision over tobacco ban

Date: 17/04/03

By Peter Chapman

Both sides are revving up for a battle in the courts, with the outcome likely to determine the fate in Europe of one of the world's richest sports

IF JOHN Grisham-style courtroom drama is more to your taste than Michael Schumacher and the drone of Formula One (F1) engines then book early for a grandstand seat in the European Court of Justice.

Because the head-to-head between motor sport and the European Commission at the Luxembourg-based court is likely to be as tense as any high-octane battle of the super-cars.

There will be no pit stops or skids, but perhaps some chicanery.

And the lawyers' wigs and gowns will not be able to measure their performance, heart rate or temperature - unlike the space-age kit of the racing driver.

But the outcome of the case - likely to be heard in a year and a half - could settle the future in Europe of one of the world's richest sports.

Fortunately, like F1, the plot is relatively simple.

Formula One's organiser, the Fédération Internationale d'Automobile (FIA) - led by British aristocrat Max Mosley - is suing the Commission for moving the finishing line with respect to a controversial law banning tobacco advertising and sponsorship at races.

In 1998, the Commission proposed a law saying the ban must enter into force in the EU by autumn 2006 at the latest.

F1 teams - festooned in the livery of 'Big Tobacco' for decades - started to seek alternatives for their lucrative long-term sponsorship deals.

Mindful that the tobacco industry would be reluctant to lose its grip on F1, the sport's top brass pushed for a global ban to coincide with the entry of the European ban, in a bid to stop an exodus from Europe after the 2006 season.

But, then came a twist in the tale.

Germany got the law struck down in court on the grounds that the ban was illegal because the directive far exceded its 'single market' legal basis.

Cue arch anti-tobacco crusader David Byrne, who took over as the health and consumer protection commissioner in 1999.

He retabled the sponsorship ban, focusing more on big cross-border events, such as F1, and cited the need to boost public health as well as the internal market.

But instead of sticking to the 2006 date, he introduced a new time limit - mid-2005 - for the ruling to take effect.

MEPs and a majority of governments backed the proposal almost unchanged.

And F1 went into a spin.

Bringing the ruling in a season-and-a-half early mean that tobacco contracts will still be valid during that time. The only way to fulfil them would be to host every race outside Europe.

Grands Prix lost during this legal limbo might never return - to great economic loss.

Worse, the work trying to bring in a global ban could be undone if countries such as China, which will host Europe's already exiled Belgian Grand Prix, develop a taste for the big bucks of F1.

European Voice asked both sides of the argument to explain what they will be telling the judge.

Leading the FIA team is Stephen Kinsella, of international firm Herbert Smith - one of Brussels' most formidable EU lawyers.

Kinsella insists he is taking nothing for granted - and doesn't want to antagonise judges who have a natural aversion to hearing pleadings via the press.

However, he insists FIA has a sound case and deserves to win.

Kinsella says there are two main arguments, based on well-established precedent. The first is the legal concept of 'legitimate expectations' of motor sport and its sponsors.

"Everyone else had been proceeding on the assumption that it [the ban] would have come into force in 2006 and they have signed contracts and organised their business accordingly.

"The Commission led everyone to believe that magic date of the end of 2006. It encouraged everyone to rely on it.

"It really screws things up when the Commission does something like this. We can't understand why it did it other than from a desire to grab headlines.

"Fifteen months is nothing in European Community time, so I don't know why they saw the need to do that when they must have seen the harm they were going to cause. We say, if you are going to do that, you need to have a very good reason."

The second, and key argument, Kinsella will cite in court is the concept of 'proportionality'.

This means the measures contained in the law have to be proportionate to their stated aims of protecting the EU's single market, through a uniform ban, and bringing a high level of health protection.

But Kinsella says the Commission's actions quite clearly fail that test.

Firstly, the single market objective becomes irrelevant, because events would have to move outside the Union to fulfil contractual obligations with sponsors.

At the same time, the health objectives would fall flat, too.

That is because races would initially be held in other countries complete with tobacco sponsorship and be beamed back to Europe on television.

By changing the date, the Commission has also "fractured a coalition to create a world-wide ban", he adds.

The upshot is that the EU would be losing the money F1 brings in and any control over how it is regulated.

Whatever happens in court, Kinsella questions Byrne's game plan if he truly believes in ridding sport of tobacco.

"There is an interesting fundamental question about the Commission's tactics because the FIA would not be challenging this legislation if the Commission hadn't put in that early date.

"The reality is, by doing what they have done, they have actually seriously jeopardised their chances of having that legislation in place by 2006. You can't quite understand their thinking, tactically.

"They must have been advised that changing the date and bringing it forward was going to give rise to another challenge."

In his personal view, Kinsella believes this brings into question the motives of Byrne and his fellow commissioners - who will have left office by the end of 2004.

"I personally think they are only interested in headlines being seen to be doing something that they can say is good for the consumer.

"I don't think they really care too much if they get shot down, because all they will say in the end is 'we did our best for the European consumer'. Cynically, they are just politicians."

Byrne's top advisors, of course, deny their boss has betrayed motor sport.

Nor do they accept claims that they will be responsible for a Formula One exodus from Europe.

"The FIA has to accept the democratic will of the European Parliament and the national governments of EU member states," insists Byrne's spokesman Thorsten Münch.

Looking back, he says the final October 2006 deadline for tobacco sponsorship in the original directive was also accompanied by measures intended to have an impact far sooner.

"The first directive on tobacco advertising and sponsorship from 1998 obliged EU member states to implement the directive not later than 30 July 2001," he explained.

"In exceptional cases and for justified reasons, member states may continue to authorise the existing sponsorship of events or activities organised at world level for a further period ending not later than 1 October 2006."

Crucially, this was "provided that the sums devoted to such sponsorship decrease over the transitional period and that voluntary-restraint measures are introduced in order to reduce the visibility of advertising at the events or activities concerned."

In the next chapter of the story, Münch admits the Commission's new proposal for a Tobacco Advertising Directive, presented in May 2001, "did not include such an exemption".

But he points out that the European Parliament discussed and voted on a corresponding amendment in November 2002.

"A majority of MEPs rejected it," says Münch. It was the same story when governments looked at the issue. When ministers discussed the proposal in the Council meeting on 2 December 2002, not a single national government expressed its wish to have such an exception in the new directive.

"Member states agreed to implement all aspects of the directive by 31 July 2005 at the latest, without any exception."

It's a shame David Byrne - a former Irish attorney-general and a formidable lawyer - is unlikely to be in the European Court of Justice to plead in person.

An impassioned Byrne recently asked if the "tainted money of big tobacco is more important to the Formula One machine than the spirit of the sport and the dedication of its fans in Europe?"

It's not difficult to imagine him repeating this mantra before the court telling the judge, "I rest my case your honour".

Bookmakers have a field day before any big race. So what is the betting when F1 moves to the courtrooms?

"I would bet my entire Commission salary for a month that the FIA loses," said one official.

But who will be on the winners' podium? "The lawyers, of course," he added, "they always win."

Formula One's organiser, the Fédération Internationale d'Automobile (FIA) - led by British aristocrat Max Mosley - is suing the European Commission for bringing in a controversial law banning tobacco advertising and sponsorship at races earlier than planned.