Britain's media regulator is investigating the pay TV industry dominated by Rupert Murdoch's Bskyb after its main rivals accused it of moves to suppress competition.
The announcement follows a public dispute between Bskyb and its largest rival, Virgin Media, and the news that it is being investigated over its purchase of an 18 per cent stake in the country's largest commercial broadcaster, ITV.
Regulator Ofcom said it would investigate the market after receiving a submission from Bskyb's smaller rivals - BT Group , Ireland's Setanta, Top UP TV and Virgin Media.
It will consider whether to refer the market for further scrutiny from the Competition Commission in an investigation that could last many months. If referred, any Competition Commission inquiry could last up to two years.
Bskyb has rejected any suggestion it had reduced competition.
The investigation will cover subscription and video-on-demand television services on cable, digital terrestrial television or Freeview, satellite and TV over the Internet.
It will also look specifically at Bskyb's plans to remove three of its free channels - Sky News, Sky Sports News and Sky Three - from the popular Freeview platform to make way for subscription-based channels that would show its Premier League soccer and movies.
That decision put Bskyb
in direct competition with Setanta and Top Up TV, which are set to use a different subscription system on Freeview to show some Premier League games.
Bskyb's purchase in November of a 17.9 per cent stake in ITV was seen as a "blocking stake" to prevent NTL - now Virgin Media - from making a bid for the whole company which would have resulted in a stronger competitor.