Project Canvas given all-clear by OFT?

Project Canvas, the video-on-demand service backed by seven partners including the BBC, ITV and BT, will not be investigated by the Office of Fair Trading over competition issues; potentially given it the green light to go ahead.

Speaking today,¬†Sheldon Mills, director of mergers at the OFT, explained the decision: “Our investigation has confirmed that the partners, including the BBC, do not intend to transfer an existing business into the joint venture," he said. "Therefore, regardless of the potential significance of Project Canvas joint venture for the future of internet connected television, the notified proposals do not give rise to a merger qualifying for substantive investigation by the OFT.”

The decision comes as a slight shock as Project Kangaroo, a similar idea to Canvas, was previously poo-pooed. However, the OFT decided that there were telling differences between the ventures: "Unlike in the Project Kangaroo joint venture, which was blocked by the Competition Commission in 2009, it is not proposed that the joint venture partners will contribute 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."

As The BBC Trust has already given its blessing to the venture, this all means that the Project Canvas standardised VOD platform is now closer to becoming a reality. This will come as something of a relief to the development team, which has been feverously beavering on with the groundwork in the hope that this announcement would come.

Others who stand to gain from Project Canvas' launch are also, naturally delighted by the OFT statement - Graham North, commercial director of set-top-box manufacturer Humax for one: "The announcement today from the Office of Fair Trading regarding Project Canvas is great news for the digital television industry as a whole," he says. "Humax believes that this service will enable further growth in the digital TV market - giving the UK population a greater range of content, more choice over how they watch it and ultimately more control over their viewing."

However, North also highlights that this is only the first step and that there's a lot of hard work yet to come - notably for hardware manufacturers: "While the content of Canvas forms a huge part of the project, the delivery is also dependent on many other parties. The hardware used to deliver the content is an important component and must live up to consumer expectations."

Indeed, if the kit doesn't match the ambition of Canvas itself, this announcement could have been merely a minor victory. Nevertheless, this is massive news for the seven partners. Now, the big question is, will they rename it? Surely they won't stick with Project Canvas...

UPDATE: It has been brought to our attention that there may still be a twist in the tale for Project Canvas. The OFT statement includes a foreboding footnote: "This decision does not preclude the application of other provisions of Competition law and other relevant legislation."

This essentially means that although the venture has cleared one hurdle, there may be other potential obstacles to overcome.

Certainly neither Virgin Media or Sky are fans, and may call for further investigation. Fierce competitors they may be, they have both been united in their public criticism of Canvas.

It seems the green-light may be amber after all...