The takeover of Infront by Bridgepoint Capital has cleared the final hurdle. Earlier this week, the European Commission Competition Directorate General announced that there were no objections to having the rights holders to both the MotoGP and World Superbike series being owned by one company, as neither racing series would be constrained by having the same owner.
Although obtaining clearance from the EU was a formality, with few observers expecting the deal to be blocked, it was a necessary step given the size of the two companies involved. Both Bridgepoint Capital and Infront Sports and Media (the parent company of Infront Motor Sports) were large enough to require approval under European Union mergers legislation. That has little to do with the size of either MotoGP or World Superbikes, however: neither Dorna nor Infront Motor Sports represents anything more than a small fraction of the total turnover of their respective parents, Bridgepoint and Infront Sports and Media. The parents, however, were considered worthy of examination.
The reasons quoted in the press release issued by the EU Competition Directorate General provide a little insight into the envisioned future of both WSBK and MotoGP. The European Commission concluded that there was little chance of the two series conspiring together over TV contracts, or to force circuit owners or teams into a difficult situation. The competition between the two series, together with competition from some of the larger national series such as the Spanish CEV, Italian CIV, German IDM and British BSB championships gave teams, circuits and TV companies enough protection against monopolistic actions by Bridgepoint.
The approval by the European Commission also makes the possibility of the MotoGP and World Superbike series being merged into a single racing series actually more remote. The Commission can decide to take another look at companies engaging in what might be perceived as monopolistic behavior, even after approval has been given for one company to acquire ownership of another. The business rationale for merging to the two series is also weak: both MotoGP and World Superbikes have a very strong fan base, and teams and manufacturers have sound reasons for being present in the two series.
What the merger will do - and indeed, has done - is stop the looming legal battle between Infront and the FIM over the use of production engines in MotoGP's CRT machines. Prior to the merger, both Maurizio and Paolo Flammini (IMS' bosses) had threatened legal action of the CRT rules, claiming that they had been granted a monopoly on racing production machinery. Despite FIM president Vito Ippolito claiming that the Flammini's monopoly was only on complete bikes, as homologated by the FIM, the Flamminis bristled at every mention of the new CRT regulations. For Bridgepoint, as a private equity company, only the bottom line counts. Their only interest is that all of their various subsidiaries show a healthy profit, or steps towards producing a healthy profit. Having two of their subsidiaries engaged in a legal wrangle over what remains at best a rather esoteric point of interpretation is likely to be considered a waste of both effort and money, and would be severely frowned upon.
The move does pave the way for the anticipated rule changes coming in both series. Both MotoGP and WSBK are expected to limit technology, with Dorna boss Carmelo Ezpeleta pushing to introduce a rev limit and spec ECU in 2013, and WSBK moving ever closer to Superstock rules, both in an attempt to cut costs. With the approval of the European Commission, a more concerted effort is likely be made to coordinate cost-cutting efforts and limits on technology to some extent. This looks like being the first step towards a more sustainable future for motorcycle racing.
Below is the official press release from the EU Competition Directorate General announcing the approval for the deal:
Mergers: Commission approves acquisition of sports marketing group Infront by Bridgepoint
Brussels, 20 December 2011 - The European Commission cleared under the EU Merger Regulation the proposed acquisition of Infront Sports and Media AG of Switzerland by private equity Bridgepoint Capital Group Limited of the United Kingdom. The Commission concluded that the transaction will not raise competition concerns due to the limited overlaps between the parties' activities and to the fact that sufficient alternative sources of supply will continue to be available to the merged entity's customers in all markets concerned.
Both Bridgepoint and Infront are active in the organisation of motorbike racing events (MotoGP for Bridgepoint and Superbike for Infront). The Commission examined the competitive effects of the proposed acquisition in particular in the markets for motor sport regulators (namely FIM, the Fédération Internationale de Motocyclisme, which is the regulator for both MotoGP and Superbike), teams and manufacturers, circuit owners and local promoters, advertisers and TV broadcasters.
The Commission found that the proposed transaction would give rise to certain horizontal overlaps and conglomerate relations between the parties. However, the Commission's investigation revealed that the overlaps were limited and that customers will be able to source from alternative suppliers in all markets concerned. Moreover, the Commission found that the proposed transaction would not give the merged entity the possibility to engage in tying and/or bundling against teams and manufacturers, circuit owners and local promoters, advertisers and TV broadcasters because of the existing dynamics in each of the relevant markets.
The Commission therefore concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
The transaction was notified to the Commission on 15 November 2011.
Background on companies
Bridgepoint provides private equity to companies active in a broad range of sectors worldwide. In the motorsport sector, Bridgepoint controls Dorna, a company active in the organisation and management of motorcycle racing championships, including the Moto GP championship.
Infront is a global sports media and marketing group, which holds a portfolio of media and marketing rights for different types of sports. In the motorsport sector, it holds the right to organise and manage the Superbike championship.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
A non-confidential version of today's decision will be available at: