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Ambitious plans for an online video on demand service offering more than 10,000 hours of classic TV shows from the BBC, ITV and Channel 4 were hit yesterday by a decision to refer them to the Competition Commission. ITV's chairman, Michael Grade, criticised the decision on the project, known as Kangaroo, saying it would put British broadcasters at a disadvantage compared with American rivals. There was a "serious problem" with competition regulation in the UK, he said.

Some rival broadcasters, including BSkyB, had complained that the launch of Kangaroo risked skewing the market. The Office of Fair Trading, which referred Project Kangaroo to the commission, made a comparison with the recent acquisition by Amazon of the DVD rental service Lovefilm, saying that that merger was satisfactory because there would be enough alternatives for consumers. It said that there was not yet enough evidence to make a similar judgment on Kangaroo.

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