Kangaroo web TV faces competition scrutiny

Kangaroo, the proposed online on-demand video joint venture between BBC Worldwide, ITV and Channel 4, has been referred to the Competition Commission.

The Office of Fair Trading (OFT) says the joint venture could create an excessive concentration of video content.

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Kangaroo - which is headed up by ex-BBC director of future media and technology, Ashley Highfield - aims to bring together content from all three UK broadcasters along with syndicating rights to other video on demand services.

The rights library will be the largest source of UK TV content which users will be able to access for free or on a download to rent or own basis.

But the OFT is worried the concentration of content could potentially give the joint venture excessive power in the market.

This could result in higher prices for content syndicated to wholesale customers or sold to users.

The OFT has referred the issue to the Competition Commission as there is insufficient information about pricing and competition to make a "robust judgement".

Simon Pritchard, senior director of mergers at the OFT, said in a statement: "Video on demand is a new and fast-growing consumer sector, and we should judge the issues on evidence, rather than speculate about consumer behaviour."

In a joint statement BBC Worldwide, ITV and Channel 4 said they were disappointed by the decision but "remain committed to what the venture offers".

The Kangaroo broadcasters said they are confident the Competition Commission will see the service as a "pro-competitive force" following closer scrutiny.

ITV's executive chairman, Michael Grade, said there must be a "level playing field" for those organisations whose investment "sustains UK production".

He added in a statement: "This venture has been delayed by a reference to the Competition Commission, at the very same time that non-UK companies like Google and Apple are free to build market dominating positions online in the UK without so much as a regulatory murmur."

The Competition Commission now has until 12 December to gather more evidence and consider the issue.