1997–2001
Mosley was elected to his second term as president of the FIA in October 1997.
Later that year, the EU Commission Directorate-General for Competition made a preliminary decision against Ecclestone and the FIA. The resulting warning letters from van Miert to the FIA and Ecclestone were leaked and ended the attempt to float F1; the FIA won a case against the commission for the leak in 1998.
At the same time, a local court in Germany ruled that the television rights to the FIA European Truck Racing Cup (passed to Ecclestone by the FIA the previous year, along with all other FIA authorised championships) should be returned to the series organiser, following a complaint from German television company AE TV-Cooperations. The TV Company argued that Ecclestone and Mosley were in breach of commercial clauses in the Treaty of Rome; following the court's decision Mosley appealed the judgement and cancelled the series until further notice.
On appeal, the court ruled that the series organiser should be able to sell the television rights to whoever they felt was the best option for coverage and the FIA reinstated the European Truck Racing Cup. Between 1997 and 2000, Mosley repeatedly warned that if any EU decision went against the FIA, the marketing organisations and F1 itself would be moved out of Europe. In 1999, the EU Commission Directorate-General for Competition issued a Statement of Objections, listing a number of grievances surrounding the FIA's dealings with Ecclestone and Formula One. The FIA released the Statement to the media and held a press conference in Brussels ridiculing the commission's case.
The Commission argued that a number of commercial agreements could be viewed as anti-competitive and invited the FIA and Ecclestone's companies, ISC and FOA, to submit proposals to modify these arrangements. In 2001, nine months after settlement talks had begun, the parties reached an agreement to amend existing contracts, which included Ecclestone stepping down as the FIA's vice-president of promotional affairs and the FIA ending all involvement in the commercial activities of Formula One.
Mosley came up with an innovative way to dispose of the FIA's involvement in the commercial activities of Formula One. In order to maintain Ecclestone's investment to deliver digital television, he proposed extending Ecclestone's rights for F1 coverage to 100 years from the initial 15, arguing that a deal of such length could not be anti-competition as it was effectively the same as an outright sale. The Commission agreed with his assessment and in the interest of impartiality, Mosley removed himself from the negotiations, which eventually returned around $300 million (£150 million).
The FIA planned to "put almost all of it into a charitable foundation which will then have the resources to undertake important work on improving safety in motor sport and in road safety", and thus the FIA Foundation was created in 2001. In addition, the FIA continued to receive an annual dividend from the deal, Mosley stated: "Over the totality of the contract, and on an annual basis, the sum we have accepted represents billions of dollars. Looked at from that point of view, it is a huge amount of money." Lovell compares the figure to extend the rights to 100 years to the £600 million KirchGruppe paid for the rights to the 2002 Football World Cup and the £1.1 billion British Sky Broadcasting paid for a three-year package of English Premier League football.
The figure was not entirely comparable due to the dispute over who actually owned Formula One. Before the settlement with the EU Commission was reached, Mosley feared that the FIA was losing control over the sport following a heated argument with Ecclestone in Paris. Ecclestone argued that he had built Formula One into the entity that it was and the FIA only had rights to designate the event as official. Ecclestone threatened to "do a scorched earth" if another party were to gain control of the commercial side of Formula One. Mosley came up with the solution in order for the FIA to retain its sporting management role and Ecclestone to retain his commercial role.
Over the same period, Mosley was attempting to delay European legislation banning tobacco advertising. Formula One advertisements were controlled by Paddy McNally, an ex-Marlboro sponsorship consultant, and his company Allsport Management SA. At this time, all leading Formula One teams carried significant branding from tobacco brands; for instance, Williams ran with backing from Rothmans; West was a backer of several teams including McLaren; McLaren also enjoyed a long-term relationship with Marlboro, as did Ferrari, and Mild Seven backed Benetton's Formula One effort. The Labour party had pledged to ban tobacco advertising in its manifesto ahead of its 1997 General Election victory, supporting a proposed European Union Directive. The Labour Party's stance on banning tobacco advertising was reinforced following the election by forceful statements from the Health Secretary Frank Dobson and Minister for Public Health Tessa Jowell.
Ecclestone appealed "over Jowell's head" to Jonathan Powell, Tony Blair's chief of staff, who arranged a meeting with Blair. Ecclestone and Mosley, both Labour Party donors, met Blair on 16 October 1997. Mosley argued that the proposed legislation was illegal by EU rules, that Formula One needed more time to find alternative sources of funding and that the prompt introduction of a ban would lead to races being held outside Europe, while the coverage, including tobacco logos, would still be broadcast into the EU. He also argued that:
Motor racing was a world class industry which put Britain at the hi-tech edge. Deprived of tobacco money, Formula One would move abroad at the loss of 50,000 jobs, 150,000 part-time jobs and £900 million of exports.
On 4 November, the "fiercely anti-tobacco Jowell" argued in Brussels for an exemption for Formula One. Media attention initially focused on Labour bending its principles for a "glamour sport" and on the "false trail" of Jowell's husband's links to the Benetton Formula team. On 6 November, correspondents from three newspapers enquired whether Labour had received any donations from Ecclestone; he had donated £1 million in January 1997. On 11 November, Labour promised to return the money on the advice of Sir Patrick Neill.
On 17 November, Blair apologised for his government's mishandling of the affair and stated "the decision to exempt Formula One from tobacco sponsorship was taken two weeks later. It was in response to fears that Britain might lose the industry overseas to Asian countries who were bidding for it."
The revised directive went into force in June 1998, and banned sponsorship from 2003, with a further three-year extension for "global sports such as Formula One". On 5 October 2000, the directive was overturned in the European Court of Justice on the grounds that it was unlawful. A new Tobacco Advertising Directive took effect in July 2005; the Financial Times described Mosley as "furious" that this was a year earlier than provided for under the 1998 directive. As of 2009, Ferrari is the only F1 team to retain tobacco sponsorship, although the team carries no explicit branding in races because of the European legislation. Although the FIA moved its headquarters out of the EU in 1999, it returned in 2001.
Asked in a 2003 interview about his most enduring achievement as president of the FIA, Mosley replied: "I think using Formula One to push ENCAP Crash-Testing." The European New Car Assessment Programme (Euro NCAP) is a European car safety performance assessment programme that originated with work done by the Transport Research Laboratory for the UK Department for Transport. The FIA became involved in the programme in 1996, taking a lead in promoting it, and Mosley chaired the body from its launch as Euro NCAP in 1997 to 2004.
Despite what NCAP describes as a "strong negative response" from car manufacturers at first, the initiative has expanded, and NCAP says that there has been a clear increase in the safety of modern cars as a result. The EU commission in 2000 stated that "EuroNCAP had become the single most important mechanism for achieving advances in vehicle safety" and "the most cost effective road safety action available to the EU." Mosley continued to promote the matter through his membership of initiatives such as CARS 21, the European Commission's policy group aimed at improving the worldwide competitiveness of the European automotive industry.
In February 2001, Mosley announced his intention to stand again for the presidency in October of that year, saying that if successful this third term would be his last.
