A plan by the BBC, ITV and Channel 4 to jointly create a competitor to YouTube may be blocked because it is anti-competitive, a regulator said on Wednesday.

The Competition Commission said that it was prepared to oppose the new venture — called Project Kangaroo — if the broadcasters could not find alternative ways to limit its impact on competitors.

Peter Freeman, chairman of the Commission, said: “We are concerned that a loss of rivalry between BBC, ITV and Channel 4, who are normally regarded as close competitors, could restrict existing and future competition for video-on-demand.”

Kangaroo is intended to allow Britons to watch recently broadcast BBC, ITV and Channel 4 programmes from one website. However, since its announcement last year it has been mired in regulatory difficulties.

The Commission said that it was concerned that the project would create a “substantial lessening of competition” in the supply of British video-on-demand programmes. However, it added that Kangaroo would not unfairly impact the online advertising market, which is dominated by Google and its subsidiary YouTube.

Kangaroo insiders said that the verdict was not unexpected, in part because the Commission is always obliged to say that it will consider outright prohibition if it finds a prima facie competition problem.

Kangaroo hopes to reach an agreement with the Commission that will allow it to be launched next year with conditions attached. Yesterday the Commission outlined alternative remedies to allow the site to get under way, some of which Kangaroo sources said they “could live with”.

In one scenario, Kangaroo could be launched but the three broadcasters would be required to offer access to video-on-demand content to third parties — meaning other websites — on “a fair, reasonable and non-discriminatory basis”.

The Commission also proposed that Kangaroo be “limited to providing links [to programmes connected] to itv.com and Channel4.com”.

A lawyer acting for one third party objector said that Kangaroo's optimism is not necessarily justified: “The fact is that prohibition is an option.”

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