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The referral could delay the launch of the “Kangaroo” project by six months, as the Commission has 24 weeks to consider the issues and collect evidence. Kangaroo has been set for an Autumn launch.

The OFT is concerned that there are doubts whether the project concentrates too much content in the hands of one organisation. It notes that the collective rights library will be the largest and richest source of UK television content, not least because the BBC and ITV are each contributing the two single largest archives of popular UK programming and all three parties are combining their significant portfolios of rights to various recent independent UK TV shows.

“Concerns arise because the concentration of these important and competing libraries of UK TV programming may give market power to the joint venture, enabling it to charge higher prices in syndicating content to wholesale customers,

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and potentially raise download-to-rent and download-to-own prices paid by video on demand consumers, or limit the range of ways in which viewers can watch the parties’ content on demand,” the OFT said in a statement.

It added that while it is easy to speculate about what different UK viewers might do if the joint venture charged a higher price, there was a lack of good evidence available. Therefore, it said, is appropriate to ask the Competition Commission to investigate further.

In order to avoid reference, the parties did offer remedies, but they were of limited scope, which the OFT did not consider sufficient to resolve the above concerns in a clear-cut fashion.

ITV chairman Michael Grade said while the OFT is only doing its job, the rules need changing.

“There is a serious problem with a regulatory framework that seems unable to take the most important interest into account - that of British viewers,” he said. “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.”

Kangaroo said in a statement that it is disappointed, but insists that the Compeition Commission will find that the project provides greater choice for consumers in a competitive market.

[photo: Kangaroo Sign by mr toaster]