Competition Commission casts doubt on broadcasters' online shop

UKVOD, also known as Project Kangaroo, is a joint venture among the BBC's commercial arm, BBC Worldwide, Channel 4 and ITV. It is a plan for a 'one-stop-shop' for online access to recently-aired programmes as well as archive content.

The broadcasters expect the great majority of views to be free and funded by advertising but customers will be charged for some content. As well as providing a retail service to customers, UKVOD plans to license its VOD service, or a substantial part of it, to other VOD services on a wholesale basis.

The matter was referred to the Competition Commission by the Office of Fair Trading which has powers under the Enterprise Act of 2002 to refer certain completed or proposed mergers for investigation.

The Competition Commission said today that it is concerned about competition in the supply of UK TV video on-demand content at the wholesale and retail levels. It said that it does not expect the joint venture to lead to a substantial lessening of competition in online advertising or content acquisition.

Chairman Peter Freeman said there was concern that "a loss of rivalry" between the broadcasters could restrict competition for VOD. "Whatever benefits viewers would gain from this rivalry would clearly be lost," he said.

"UKVOD would have the ability and incentive to impose unfavourable terms when licensing domestic content to rival VOD providers," said Freeman. "At the extreme, UKVOD might withhold content from its rivals altogether. Any reduction in access to content would be likely to impact unfavourably on viewers."

The Commission has also published for consultation a notice of possible remedies to address its concerns. These include putting in place access remedies to control the way that content is offered to other providers and/or making material modifications to the terms of the joint venture.

This might include, for example, adjusting the scope of the joint venture's activities or the terms of exclusivity between the joint venture and its parents, it suggests.

"In the event that none of these are effective, prohibition would also be an option," said a Commission statement.