Liberty Media under scrutiny for antitrust violations after rejecting Andretti’s F1 bid

Three months after receiving letters from members of the U.S. Congress — including one from Rep. Jim Jordan (R-Ohio), chairman of the House Judiciary Committee — criticizing and questioning the decision to deny Andretti Global and Cadillac a chance to join the Formula One grid in 2025 or 2026, Libery Media noted in an earnings call Thursday that it is facing an investigation by the U.S. Department of Justice over antitrust violations.

Greg Maffei, CEO of the Colorado-based company, which through its Formula One Management subsidiary owns the commercial rights to the Formula One World Championship, said during the call that Liberty Media would cooperate with the Justice Department and that he was confident Liberty had not violated any laws in the Andretti decision.

“We believe that our determination, the F1 determination, complied with all applicable U.S. antitrust laws and we have explained our decision in detail in our previous statements against Andrett,” Maffei told Wall Street business analysts. “We certainly do not oppose the idea that any expansion is bad. There is a methodology for expansion that requires approval by the FIA ​​and F1, and both groups have to find criteria that are met.

“We are certainly open to new participants applying and potentially being accepted if these requirements are met.”

The years-long process began in 2021, when Michael Andretti lost a last-minute deal with Sauber to buy a controlling stake in his soon-to-be-wholly-owned F1 team. The following February, Mario Andretti announced that his son had filed paperwork with F1 officials to inquire about joining the grid as an expansion franchise, first revealing to IndyStar that Andretti planned to build his cars at his sprawling headquarters in Fishers, currently under construction.

After a series of tense, public back-and-forths with Libery and F1 officials, as well as many team owners — most of whom were staunchly opposed to expansion in order to protect the financial solvency of the 10 current teams and their skyrocketing valuations — for much of 2022, the FIA ​​announced in early 2023 that it would open an “expression of interest” process where potential new team owners could seek approval to join the F1 grid. After receiving backing from General Motors and its luxury racing brand Cadillac to launch the tandem project, Andretti would be the only team to receive the green light from the FIA ​​last October.

“Andretti Formula Racing LLC was the only entity that met the selection criteria that were established in every material respect,” FIA President Mohammed Ben Sulayem said at the time, referring to the FIA’s “robust” due diligence process. “I congratulate Michael Andretti and his team for their thorough submission.”

Andretti and GM’s application was then forwarded to Libera Media and FOM for further consideration, as any new F1 entrant must be jointly approved by the sporting and commercial sides to be granted full clearance. Four months later, F1 downplayed Andretti’s application in an outright refusal, stating that the entry was unlikely to be competitive; that its stakeholders likely did not understand the scope and difficulty of the project; that it was unlikely to add value to the sport and its current 10 teams; and that the Andretti brand was likely to benefit from the admission rather than vice versa.

From January: Formula 1 rejects Andretti Global’s offer to join in 2025 or 2026, leaving door open for future

“Our evaluation process has determined that the presence of an 11th team would not, in itself, add value to the Championship,” F1 wrote in a three-page decision letter sent to Andretti representatives. “The most important way in which a new entrant would add value is by being competitive. We do not believe that the Applicant would be a competitive entrant.

“While the Andretti name has some recognition among F1 fans, our research indicates that F1 would add value to the Andretti brand, not the other way around. … We do not believe that the Applicant has demonstrated that it would add value to the Championship. We conclude that the Applicant’s application to participate in the Championship should not be granted.”

In a statement in response that same day in January, the team said it “strongly disagrees” with F1’s findings. “Andretti and Cadillac are two successful global motorsport organizations committed to putting a true American factory team in F1, competing with the best in the world,” the pair said in a statement. “We are proud of the significant progress we have already made in developing a highly competitive car and power unit with an experienced team behind it, and our work continues apace.”

In April of this year, the team opened a new, nearly 50,000-square-foot facility near Britain’s legendary Silverstone racetrack, from which more than 100 employees focused on F1 projects will work on further development. According to Mario Andretti, Michael’s famous father and 1978 F1 champion, all the work of the past few years will come down to next year or so. Although F1 and Liberty have said they are willing to potentially reconsider Andretti Global’s offer once Cadillac is able to produce its own power unit for the project in 2028, the elder Andretti told reporters in Long Beach in April that the team’s F1 prospects are either boom or bust if it comes in in 2026, rather than having to pay hundreds of millions more in a hefty entry fee that would be split between the 10 current teams to compensate for losses because the F1 marketing money would be split 11 ways, not 10.

“The thing is, there is a Concorde Agreement that is valid now. They want to come up with another one after 2025, but we started that process more than two years ago and we are operating under the current Concorde Agreement,” Andretti said. “We didn’t build, we didn’t do everything, we didn’t invest to be here in 2030.

“The goal was to be online in 2024 when we started. Then it’s 2025, and now it’s 2026. But it has to happen. We invested knowing that we were playing by the rules and I don’t want to hear about a new one. Throw all you want at it, but that’s a different story. We’re playing by what’s now.”

“If they want blood, I’m ready”: Mario Andretti Offended by FOM’s Rejection of Andretti Cadillac Offer

Less than two weeks later — and just days before he was scheduled to meet with F1 officials at the Miami Grand Prix to further discuss the issues — the elder Andretti was on Capitol Hill with Rep. John James (R-Mich.) to meet with various members of Congress to discuss Liberty’s alleged antitrust violations. That day, a bipartisan group of about a dozen politicians sent a letter to Maffei expressing “concerns about apparent anticompetitive actions” related to Liberty’s refusal to consider Andretti in a potential expansion process. Requesting a quick response and answers to three specific questions about blocking Andretti’s bid, the signatories also said that “participation by all Formula One teams — including any American teams — should be based on merit, and not limited to protecting the current team roster.”

The first letter, made public on May 1, was followed six days later by a second letter from Jordan in which he demanded that Formula One officials provide a number of documents relating to the decision to block Andretti’s bid to race, challenged the arguments against Andretti admitting to racing and asked for “staff-level information” regarding the decision.

Andretti takes the fight to Capitol Hill: US Congress Members Write Letter to Liberty Media

“Weak teams want to be protected from competition to the detriment of consumers, and an additional team (that) will compete for prize money and sponsorship. If Formula 1 has to hinder competition and harm consumers to protect failing competitors, the entire Formula 1 model could collapse, and the entity cannot hide behind the necessity of a sports league to conduct anti-competitive conduct,” Jordan wrote.

“Delaying Andretti Cadilla’s entry into Formula 1 by even a year will hurt American consumers while benefiting failing Formula 1 teams.”

On May 21, a bipartisan group of seven U.S. senators (both from Indiana) released and sent a third letter, this time to members of the Justice Department and the Federal Trade Commission, to express concerns that Liberty and F1 “acted at the behest of their independent teams and other key stakeholders… to exclude the (Andretti Global) General Motors-formed team from participating in (F1).”

“It is possible that such a refusal to cooperate — especially if organized through a group boycott — could violate U.S. antitrust law,” the letter reads, further noting that Formula One ran with 11 teams in 2016 and 12 in 2012, and Andretti sought to be the only member of the field with an American-made car, American-made components and an American driver. The letter also rejected Formula One’s claims that Andretti would not be immediately competitive, referring to the fact that Red Bull has won all but one race in 2024 and that half of the field has failed to win a single race combined in the previous four seasons.

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It also noted the growing interest from Americans in the sport, adding that “there is obviously a financial incentive to add an American team to the F1 roster and there is no reason to block Team Andretti-Cadillac unless FOM is trying to isolate its current partners from the competition.”

“We have serious concerns that the rejection of Team Andretti-Cadillac was based on a desire to exclude a rival from the racetrack, the marketing opportunities and prestige that competing in F1 can provide to a car manufacturer competing for car sales around the world,” the letter concluded. “That F1 stakeholders could have taken concerted action to exclude Team Andretti-Cadillac – especially after it had met all the technical requirements to join F1 – merits investigation.”

Andretti Global declined to comment on reports of a Justice Department investigation into Liberty Media.

This article originally appeared in the Indianapolis Star: US Justice Department investigates Liberty Media for rejecting Andretti’s F1 bid