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Competition watchdogs are probing Project Kangaroo, the commercial web TV venture set to carry BBC, ITV and Channel 4 programming, amid claims it could suffocate rivals.

Sky has told the Office of Fair Trading it is worried that Kangaroo's backers could use their positions as public service broadcasters to promote and cross-subsidiser the service unfairly, The Telegraph reports. The firm's boss James Murdoch laid a similar charge against the BBC's online catch-up service iPlayer earlier this year.

Virgin Media has also reportedly raised competition concerns about Kangaroo, which is set to launch later this year, offering ad-supported streaming and paid-for downloads.

If OFT finds there could be a problem, it'll refer the case to the Competition Commission.

Graham McWilliam, Sky's group corporate affairs director said: "The shareholders of Kangaroo must not be allowed to leverage their unique position in television, built on public subsidy, into the on-demand space." He said that shows available via the service should also be made available to competing web TV services.

Increasingly irrelevant P2P TV service Joost tried and failed to get better content for its platform. CEO Mike Volpi joined in the cries of foul, saying: "We have asked many times. In the case of the commercial players negotiations have broken down over price. In the case of the BBC it's just been a flat-out no."

Reg sources say the Beeb's refusal to supply Joost was a big contributing factor in its decision to relocate from Europe to the US earlier this year. ®

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