Kangaroo shot down by Competition Commission

From Colin Mann in London

The UK's Competition Commission has decided to block the proposed video on demand (VOD) joint venture between the BBC through BBC Worldwide Limited (BBCW), ITV plc (ITV) and Channel Four Television Corporation (C4)—UKVOD, also known as 'Project Kangaroo'. It has concluded that none of the other remedies proposed could remove the threat to competition in the VOD market.

Peter Freeman, Competition Commission (CC) Chairman and Chairman of the inquiry group, said that after detailed and careful consideration, it had decided that the joint venture would be too much of a threat to competition in the developing market and had to be stopped.

The CC noted that without the joint venture, BBC Worldwide, ITV and Channel 4 would be close competitors of each other and 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.

After careful consideration of a combination of measures aimed at removing the wholesaling activities of the joint venture and safeguarding commercially sensitive information, the CC was 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.

"We looked closely at the possible benefits to viewers, which this joint venture might bring," said Freeman. We found that these and other benefits could come just as well from other projects that were less damaging to competition. We expect these alternatives to be much more likely to develop in the light of our decision.

It is understood that the venture – which employs some 50 staff – will be disbanded and that the venture's partners will not appeal the decision. A BBC spokesperson said: “We are disappointed by today’s decision that prevents the partners taking Kangaroo forward. However, we remain absolutely committed to delivering distinctive quality BBC programmes online and will continue to drive innovation through our successful iPlayer platform. ITV's executive chairman, Michael Grade, had previously suggested that it would concentrate on its ITV.com service. Channel 4 has yet to confirm its online TV market plans.

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