OCTAGON MOTORSPORTS LTD/BRITISH RACING DRIVERS CLUB LTD MERGER INQUIRY

1. whether motor sport spectator events are a distinct market from other spectator sports events and other leisure activities;
2. whether there are distinct markets for some or all of the other motor circuit based activities such as track testing, club events, race driving/riding schools, motor sport experience products, track days and corporate entertainments;
3. the extent to which the Formula One and Motor Cycle Grand Prix and the UK national championships constitute separate markets from other motor sport events aimed at attracting spectators;
4. the substitutability between motor sport experience products and other experience products;
5. the geographic extent of the market or markets for motor sports and other track based activities, and whether these differ for participants and spectators;
6. any differences in the characteristics of the market(s) for motor car and motorcycle events;
7. whether the extent of any relevant markets for track days, racing schools, etc, is wider than licensed circuits, including facilities such as unlicensed circuits, test tracks and disused airfields.

Is there is a distinct market for the promotion of motor sports events by rights owners or other promoters: are circuit provision and promotion separate activities/markets and what is the significance of any blurring of distinctions between them?

Barriers to entry

1. What barriers to entry exist in the provision of circuits or the promotion of various motor sport activities on those circuits?
2. What are the prospects for the entry of new circuits, apart from the Rockingham circuit, into the overall motor sports market?
3. Would the merger would have any material effects on the nature of any barriers to entry identified above and if so what effects?

Effects on Competition

1. What is the nature of competition between motor sport circuit owners? Are there areas of common interest where cooperation is in the public interest? Does such cooperation spill over into areas where competition should be maintained?
2. Would the merger reduce horizontal competition between motor sport circuits as a result of:
1. the increased number of circuits under Octagon's control?
2. creation of a duopoly or oligopoly which facilitates behaviour such as conscious parallelism in markets by Octagon and other major circuits owners?
3. the loss of Silverstone Circuits’ activities as a check on competitors’ behaviour and their effect as a competitive pricing benchmark?
3. Would the merger lead to:
1. the strengthening of Octagon’s vertical integration in the provision and promotion of track days, corporate hospitality, racing schools and other non-spectator based through OnTrack or other brand names or affiliated organisations?
2. an increase in Octagon’s role in the management of the activities of British Motorsports Promoters (BMP), giving it effective control of BMP?
4. As a result of any of the factors listed in 2) and 3), would there be adverse effects on the public interest, for example, through:
1. prices to spectators and/or circuit users and promoters being higher than they would be in the absence of the merger;
2. a loss of choice for spectators and participants as a result of reduced competition from i) independent racing schools or track day organisers; and ii) reduced activity at independent single circuits.

Benefits

1. Would the acquisition have any beneficial effects on-
1. the economy generally including employment and incomes at circuits in different parts of the UK;
2. the situation in the motor sports sectors (other than Formula One) including their prospects for healthy development?
2. Would the acquisition generate any benefits such as:
1. ensuring the continuation after 2001 of the Formula One Grand Prix in the UK; and
2. the upgrading of the Silverstone Circuit;
3. Could these possible benefits be achieved in ways other than through the merger?

Remedies

On the hypothetical basis that the Commission were to find that the acquisition could be expected to operate against the public interest, the Commission would welcome views on the practicability and effectiveness of the following possible remedies:

1. structural remedies:
1. requiring the management of the Silverstone Circuits operation (other than Formula One) to be divested to an independent management team or to revert to BRDC;
2. requiring the divestment of one or more of Octagon’s other circuits;
2. behavioural remedies restricting or weakening Octagon’s influence on the structure and operations of BMP;
3. behavioural remedies restricting Octagon’s ability to raise prices or limit the access of independent track day organisers, racing schools, motor clubs or corporate hospitality organisers to the circuits which it controls.

Notes to Editors

1. The reference was made by the Secretary of State for Trade and Industry under sections 64 and 69(2) of the Fair Trading Act 1973 on 17 April 2001 (see DTI Press Release P/2001/251).
2. The Commission has been asked to report to the Secretary of State by 6 August 2001 and the report will be published some weeks later by the DTI.
3. The inquiry is being carried out by a group of four members of the Commission: Professor Paul Geroski (inquiry chairman), Dr Gill Owen, Peter Mackay and Graham Stacey.
4. Further information can be obtained from the Commission’s website at www.competition-commission.org.uk.
5. Enquiries should be directed to Katie Bunting, Press Office, Tel: 020 7271 0244