Competition Commission: Kangaroo “will restrict competition”
The future of Project Kangaroo remains uncertain after the Competition Commission’s provisional findings reveal that the proposed VoD service will “restrict competition” in the UK.
Ahead of the final report into the joint venture between BBC Worldwide, ITV and Channel 4 (UKVoD), which is due to be published by February 8, the Competition Commission concluded that the service “is likely to result in a substantial lessening of competition (SLC) in the supply of UK TV VoD content”.
Peter Freeman, chairman of the inquiry, said: “We are concerned that a loss of rivalry between BBCW, ITV and C4C, who are normally regarded as close competitors, could restrict existing and future competition for VoD. Whatever benefits viewers would gain from this rivalry would clearly be lost.
“Domestic content is key to being able to offer strong competition to UKVoD’s proposed service – the parties control most of that content, putting them in a powerful position in relation to competitors and viewers.
“UKVoD would have the ability and incentive to impose unfavourable terms when licensing domestic content to rival VOD providers.
“Any reduction in access to content would be likely to impact unfavourably on viewers,” he concluded.
However, the provisional report did provide some relief for the Kangaroo partners, saying it does not “expect the joint venture to lead to an SLC in online advertising or content acquisition”.
The Commission also published a number of possible “remedies” to overcome competition issues, which include controlling the way that content is offered to other providers and making material modifications in terms of the venture.
An example, used by the Competition Commission, suggested “adjusting the scope of the joint venture’s activities or the terms of exclusivity between the joint venture and its parents”.
The report added: “In the event that none of these are effective, prohibition would also be an option.
“When considering these remedies, the CC will also take into account any relevant customer benefits which arise from the joint venture.”
The Commission plans to hold further hearings with the main and interested parties before publishing its final decision early next year.
BBC: 020 8743 8000 www.bbc.co.uk Channel Four: 020 7396 4444 www.channel4.com ITV: 020 7843 8000 www.itv.com