Competition probe for Canvas
March 23, 2010
The UK Office of Fair Trading is to consider a Competition Commission referral for Project Canvas, the video-on-demand service lead by the BBC. Critics including BSkyB and Virgin Media will now be able to formalise their concerns in submissions to the OFT. The outcome of a further review of the project by the BBC Trust is awaited, it has previously said it saw only limited negative commercial impact on non-participants. Sky and Virgin Media have long argued that media regulator Ofcom should have conducted a market impact assessment of the proposed service.
The OFT, which is expected to launch a consultation asking for views on Project Canvas from the industry this week, will now seek to establish whether or not the venture reaches what is known as the “merger threshold” â€“ otherwise known as a competition test. Among these tests is whether Canvas is likely to account for 25 per cent+ of the nascent UK VOD market, and/or turnover £70 million (E78m) a year.
The consultation is expected to last for several weeks. The OFT will either clear Project Canvas of reaching the threshold for a formal competition investigation, ask the partners for some form of remedy to address concerns, or refer it to the Competition Commission.