Competition Commission blocks broadcasters' online shop

The venture was designed to become a single point of access for those TV companies' content, and would have been the video-on-demand (VOD) distribution point for almost all UK-made television.

The Competition Commission has said that it could not foresee any action that would save the venture from being anti-competitive, so it has ordered that it not be allowed to proceed.

"We considered very carefully a combination of measures aimed at removing the wholesaling activities of the joint venture and safeguarding commercially sensitive information, but we were not persuaded that these measures would overcome the risk that membership of this joint venture would influence the parties' commercial decisions, particularly in relation to the wholesaling of VOD content," said Competition Commission chairman Peter Freeman.

"After detailed and careful consideration, we have decided that this joint venture would be too much of a threat to competition in this developing market and has to be stopped," he said.

"BBC Worldwide, ITV and Channel 4 together control the vast majority of [VOD] material, which puts them in a very strong position as wholesalers of TV content to restrict competition from other current and future providers of VOD services to UK viewers," said Freeman.

Freeman said that in denying the companies the opportunity to act together the Competition Commission was increasing the likely quality of future services.

"Without this venture, BBC Worldwide, ITV and Channel 4 would be close competitors of each other. We thought that viewers would benefit from better VOD services if the parties – possibly in conjunction with other new and/or already established providers of VOD – competed with each other," he said.

The BBC said that it would now focus its efforts on its existing VOD delivery service, iPlayer.

"We are disappointed by today's decision that prevents the partners taking Kangaroo forward," said a corporation statement. "However, we remain absolutely committed to delivering distinctive quality BBC programmes online and will continue to drive innovation through our successful iPlayer platform."

It is not expected that the companies behind the venture will appeal the ruling to the Competition Appeal Tribunal.

The venture was to be a single access point for the member broadcasters' recently-aired programmes and their archives. Material was expected to be free to use and advertising-funded.

A provisional report in December said that though the venture would not lessen competition in the market for online advertising, it would do so in the retail and wholesale market for VOD content supply.

The Competition Commission was asked to investigate the venture by the Office of Fair Trading.