Kangaroo Postscript: Is Canvas Already In OFT’s Pocket?

Ofcom and Sky may have recently warned Project Canvas could need Office of Fair Trading scrutiny – but the final terms of the Project Kangaroo shutdown suggest the OFT will already have significant control over the way BBC, ITV (LSE: ITV) and Channel 4 collaborate on VOD in future. The Competition Commission’s draft final undertakings instruction, on how the Kangaroo partners should now act following its prohibition, published Friday, includes the following stipulations and others…

— “Except with the prior written consent of the Office of Fair Trading (OFT), neither the BBC nor BBCW shall acquire control of both (a) all or any part of the video on
demand (VOD) activities carried on by ITV, and (b) all or any part of the VOD activities carried on by C4C

— “Except with the prior written consent of the OFT, each of BBC and BBCW shall procure that none of its directors or managers holds or is nominated to any directorship or managerial position in any company or other undertaking carrying on or having control of all or any part of the VOD activities of both ITV and C4C.”

— “The BBC and/or BBCW shall give notice to the OFT of any acquisition by BBC and/or BBCW of control of all or any part of the VOD activities carried on by either ITV or C4C not later than the date that such an acquisition takes place.”

It’s not definitive that these impact the proposed Canvas IPTV scheme, and the BBC has stressed that, unlike Kangaroo, Canvas is not a commercial joint venture but an open consortium designed to deliver free-to-air catch-up IPTV. But the instructions certainly regulate the ability of the trio to work together on VOD, give the OFT oversight of any such activity and don’t appear to limit the restrictions to commercial operations alone

The OFT’s definition of “control” in these instructions includes “the ability directly or indirectly to control or materially to influence the policy of a body corporate … in particular, where control is conferred by licensing arrangements”, under the Enterprise Act, section 26. VOD implications for any eventual BBCWW/C4 alliance are even more likely.

The BBC will argue that the Canvas system will serve as a platform to carry third-party content, and won’t “control” that content – any scrutiny could centre on what, if any, rules the BBC uses in admitting that content. Each broadcaster is expected to sign the Competition Commission document by June. The BBC Trust has not submitted the Canvas proposal to a full public value test but, after an industry consultation, is due to publish its own draft opinion on June 8. We’ll leave you to decide…