The Office of Fair Trading has given the green light to Project Canvas – ruling that the joint IPTV venture headed up by the BBC does not fall under its jurisdiction as it does not constitute a merger.

The OFT has decided that the joint venture is significantly different from the Project Kangaroo venture which was sunk after the Competition Commission got involved.

On that occasion the Commission concluded that the aggregation of such important UK VOD content (from its parent companies) would be likely to lead to a loss of rivalry between the parties, amounting to a substantial lessening of competition in the supply of UK TV VOD content at the wholesale and retail levels.

The reason for the OFT's ruling on Canvas is that the joint venture (JV) partners, BT, BBC, Talk Talk, Arqiva, Channel 4, ITV and Five are not contributing "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."

No transfer of business

Sheldon Mills, OFT Director of Mergers said: "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."

It is important to point out that it was the joint venture partners put the project forward for the OFT to look at ,and it was never likely that the collaboration be judged a merger.

Interestingly, a footnote suggests that the OFT is not ruling out further involvement, stating "This decision does not preclude the application of other provisions of Competition law and other relevant legislation."

So, with another obstacle removed, it is looking increasingly likely that we will see the first Project Canvas devices hitting out living rooms by the end of 2010 or beginning of 2011.

But, before then, expect more opposition from Sky, Virgin Media and big electronics manufacturers.