The OFT has referred 'Project Kangaroo' – a video-on-demand venture between the BBC, ITV and Channel 4 – to the Competition Commission.

The Office for Fair Trade said it was referring the case to the CC for "further evaluation" after concluding there was a lack of good evidence to either allow or block the deal.

All three broadcasters want to pool their content, creating a common website that will be accessible to consumers. "The collective rights library will be the largest and richest source of UK TV content," the OFT said.

Consumers will benefit from the ability to browse online through this entire library of British TV comedy, drama and other material in a searchable website, and watch video content on a free, download-to-rent (DTR) or download-to-own (DTO) basis.

But the OFT is concerned that combining the content will allow the joint venture to charge higher prices in syndicating content to wholesale customers, or limit the range of ways in which viewers can watch the parties' content on demand.

The regulator insisted the case was very different to the recent LoveFilm/Amazon case - involving related issues in online DVD rental services – as the OFT obtained sufficient evidence to clear the merger.

Simon Pritchard, senior director of mergers at the OFT, said: "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.

"We were in a position to clear the recent LoveFilm/Amazon merger, but that outcome would have been unsafe in this case because we lacked the evidence to make the right judgment. The CC, however, can start with our roadmap of the issues and ultimately decide what remedies, if any, are in fact required."

30/06/2008 15:58:25