The Competition Commission has ruled that BskyB will not face action over their monopoly of pay-TV film rights. The commission ruled that the existence of online film on demand companies such as LoveFilm was sufficient.

A provisional decision by the commission made in August last year that BSkyB's contracts with the major Hollywood studios were not competitive enough and needed to be weakened. Only in March this year did the commission allow that online companies should be taken into account. Netflix opened an UK based online film service in January.

LoveFilm, previously only providing films by post, launched a similar service. These moves provided greater choice for consumers, weakening the BskyB monopoly.

The commission said “Competition between providers of movie services on pay TV has changed materially and, as a result of these changes, consumers now have much greater choice.”

They said that although Sky had the rights to several major Hollywood studios, LoveFilm and Netflix have the rights to other studios, including those who produced The Hunger Games and the Twilight films.

“Both the range and recency of the content [Netflix and LoveFilm] offer will increase further as more movies become available under existing licensing agreements.”

The new findings are provisional, published to invite comments. Any comments will be considered before a final decision is reached. The Competition Commission will not at the moment propose any remedial action.

BSkyB is due to launch its own internet-based service this year, called Now TV, which will offer films without the need for a full BSkyB subscription.

The commission said that “we still believe that competition in the pay-TV retail market overall is ineffective” but that their investigation was limited to pay per view films and Sky had no material advantage in this area.

Virgin Media and BT said they were disappointed by the decision.