Kangaroo referred to monopolies commission
Kangaroo, the television catch-up and video on demand service being jointly developed by the BBC, ITV and Channel 4 has been referred to the Competition Commission by the Office of Fair Trading.
The Competition Commission (CC) now has a 24 week period to look in to the online television service which will now not debut this year, as was originally hoped by the three partner broadcasters.
The OFT revealed it has taken its decision because Kangaroo would combine the country’s two largest archives of television entertainment, from the BBC and ITV, which would otherwise be run in competition. Whilst the OFT conceded there would be consumer gains from having a single site to view (and buy) television entertainment from all three broadcasters, it pointed out it was concerned about the impact of reduced competition on download to own and download to rent prices.
Hence Simon Pritchard, Senior Director of Mergers at the OFT, summed up that without knowing whether consumers would gravitate towards other third party sites, if Kangaroo were uncompetitive, the industry watchdog had to err on the site of caution and ask for a closer inspection of the market. “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,” he concluded.
ITV’s executive chairman, Michael Grade, whilst diplomatically acknowledging the OFT has a statutory obligation to be thorough, could hardly hide his frustration, claiming the body had overlooked the benefits to the British web and tv viewers and had failed to provide a “level playing field” for British broadcasters and American technology giants.
“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 on line in the UK without so much as a regulatory murmur,” he complained.
“There must be a level playing field for those of us whose investment sustains UK production. Companies without that commitment, who financially contribute virtually nothing to the UK creative economy, are trying to use a narrow regulatory remit to exploit our investment at little cost or risk to themselves. If they succeed, the losers will be UK viewers, UK advertisers and UK producers. Today’s ruling suggests that the regulatory framework does not seem to take that wider public interest sufficiently into account.”
A joint official statement from the three broadcasters was more tactful, regretting the delay and expressing confidence Kangaroo will be given approval as the Competition Commission realises “the joint venture will provide wider choice for consumers and be seen as a pro-competitive force in the market place”.
Once the Competition Commission has made its decision in December, each of the three broadcasters will seek approval for the Kangaroo service (with any potential changes enforced by the CC) before deciding when to roll out the service.
Whilst the broadcasters would never commit to a launch date, it was widely believed to be slated for Autumn this year. The referral to the CC is likely to push this back until at least Spring 2009.
