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OFT does not block Project Canvas. Final decision from BBC Trust due soon
19 May 2010 | 14.54 Europe/London
After two months of looking in to Project Canvas the OFT has decided the joint venture that will bring internet television to future Freeview boxes actually falls outside its jurisdiction.
Rather than passing the joint venture, as some commentators are suggesting, the OFT decided that it was not its place to make a ruling.
The reason given is that none of the project’s partners (BBC, ITV, Channel 4,Five, Arqiva, BT and TalkTalk) intend to bring an existing business in to the joint venture.
Sheldon Mills, OFT Director of Mergers summed up the decision.
“In the context of a start-up joint venture such as Project Canvas, the merger control provisions are designed to capture arrangements leading to the transfer of a pre-existing business. Our investigation has confirmed that the JV partners, including the BBC, do not intend to transfer an existing business into the JV. Therefore, regardless of the potential significance of Project Canvas JV for the future of internet connected television, the notified proposals do not give rise to a merger qualifying for substantive investigation by the OFT.”
Confusion reigns
A major point, which is currently being poured over by those who believe Canvas could be anti-competitive, came out in the OFT statement regarding what the Canvas service would actually offer. The OFT’s understanding would appear to suggest that none of the partners are committing any existing video-on-demand service to the platform but also that it will not be used to aggregate or market any such services.
The OFT statement read:
“Unlike in the Project Kangaroo joint venture which was blocked by the Competition Commission in 2009, it is not proposed that the JV Partners will contribute any video-on-demand content or other business to Canvas, and Canvas will have no role in aggregating, marketing or directly retailing any such television content.”
Benedict Evans, an analyst at Enders Analysis, tells SamKnows the perception is that the OFT is referring mainly to advertising. Given that Kangaroo was going to aggregate content and advertising on a single platform, and hence was banned, he believes the OFT is making a point that it is not making a ruling because channels will act independently of one another.
He also points that any broadcaster meeting the criteria can launch on the open platform, so it is not closed to just its founders, as Kangaroo was.
Viewing experience
However the services are described by the OFT, and however those phrases are understood, the feeling at Virgin Media is that the eventual offering will still be branded Canvas and accessed through a Canvas-branded menu – meaning it could not be offered within a Virgin Media box and presented as a Virgin Media experience to its subscribers.
Hence, the company is sticking to its line that it is in favour of open standards which all broadcasters could use on the next generation set top boxes, but it is against these being presented as a Canvas experience.
“As they stand, the Canvas proposals risk severely restricting competition and innovation in the UK’s digital media landscape,” reiterated a spokesperson for Virgin Media on hearing the OFT ruling.
A very interesting point has been raised by one broadcaster’s lawyers. The ruling, they have pointed out to SamKnows, is not typical of an OFT statement in that it not only makes clear that the authority is not ruling on the joint venture but also makes the point that the platform is still answerable to competition laws.
Many commentators are suggesting it is now down to the BBC Trust to give the platform its final blessing, and that is, strictly speaking, accurate. However, one could foresee the OFT’s findings certainly appear to be giving grounds for rival broadcasters to consider further legal action.
Sky has told SamKnows that it is waiting until the BBC Trust's gives its decision "any time soon" before it goes public with an opinion and considers its position.
The broadcaster has always maintained that Canvas has learned the lessons of Kangaroo by ensuring the platform is a gateway to separate services rather than an aggregator. As such the OFT was unlikely to find it was a merger in need of investigation and the big announcement is the one due soon from the BBC Trust.
Rather than passing the joint venture, as some commentators are suggesting, the OFT decided that it was not its place to make a ruling.
The reason given is that none of the project’s partners (BBC, ITV, Channel 4,Five, Arqiva, BT and TalkTalk) intend to bring an existing business in to the joint venture.
Sheldon Mills, OFT Director of Mergers summed up the decision.
“In the context of a start-up joint venture such as Project Canvas, the merger control provisions are designed to capture arrangements leading to the transfer of a pre-existing business. Our investigation has confirmed that the JV partners, including the BBC, do not intend to transfer an existing business into the JV. Therefore, regardless of the potential significance of Project Canvas JV for the future of internet connected television, the notified proposals do not give rise to a merger qualifying for substantive investigation by the OFT.”
Confusion reigns
A major point, which is currently being poured over by those who believe Canvas could be anti-competitive, came out in the OFT statement regarding what the Canvas service would actually offer. The OFT’s understanding would appear to suggest that none of the partners are committing any existing video-on-demand service to the platform but also that it will not be used to aggregate or market any such services.
The OFT statement read:
“Unlike in the Project Kangaroo joint venture which was blocked by the Competition Commission in 2009, it is not proposed that the JV Partners will contribute any video-on-demand content or other business to Canvas, and Canvas will have no role in aggregating, marketing or directly retailing any such television content.”
Benedict Evans, an analyst at Enders Analysis, tells SamKnows the perception is that the OFT is referring mainly to advertising. Given that Kangaroo was going to aggregate content and advertising on a single platform, and hence was banned, he believes the OFT is making a point that it is not making a ruling because channels will act independently of one another.
He also points that any broadcaster meeting the criteria can launch on the open platform, so it is not closed to just its founders, as Kangaroo was.
Viewing experience
However the services are described by the OFT, and however those phrases are understood, the feeling at Virgin Media is that the eventual offering will still be branded Canvas and accessed through a Canvas-branded menu – meaning it could not be offered within a Virgin Media box and presented as a Virgin Media experience to its subscribers.
Hence, the company is sticking to its line that it is in favour of open standards which all broadcasters could use on the next generation set top boxes, but it is against these being presented as a Canvas experience.
“As they stand, the Canvas proposals risk severely restricting competition and innovation in the UK’s digital media landscape,” reiterated a spokesperson for Virgin Media on hearing the OFT ruling.
A very interesting point has been raised by one broadcaster’s lawyers. The ruling, they have pointed out to SamKnows, is not typical of an OFT statement in that it not only makes clear that the authority is not ruling on the joint venture but also makes the point that the platform is still answerable to competition laws.
Many commentators are suggesting it is now down to the BBC Trust to give the platform its final blessing, and that is, strictly speaking, accurate. However, one could foresee the OFT’s findings certainly appear to be giving grounds for rival broadcasters to consider further legal action.
Sky has told SamKnows that it is waiting until the BBC Trust's gives its decision "any time soon" before it goes public with an opinion and considers its position.
The broadcaster has always maintained that Canvas has learned the lessons of Kangaroo by ensuring the platform is a gateway to separate services rather than an aggregator. As such the OFT was unlikely to find it was a merger in need of investigation and the big announcement is the one due soon from the BBC Trust.