BSkyB's stranglehold on movies from the big Hollywood studios does not harm competition in the pay-TV market, a watchdog ruled today.
The Competition Commission said it believed consumers attached more importance to having access to a broad range of content and to price than they do to seeing the most recent movie content.
And it said the launch of services by US firm Netflix and Lovefilm meant consumers now had a much wider choice than when the Commission launched its investigation into the sector two years ago.
In provisional findings last August, the watchdog initially ruled that Sky's deals with six of the big film studios over the rights to films when they are first shown on television restricted competition.
But it revised this view in May and confirmed today that it will not be taking any action on the issue.
While it said competition in the pay-TV market overall remained ineffective, it concluded that first-pay movie content does not provide Sky with an advantage when competing for pay-TV subscribers.
Inquiry chairman Laura Carstensen said: "It is clear that consumers now have a much greater choice than they had a couple of years ago when our investigation began.
"Lovefilm and Netflix are proving attractive to many consumers, which reinforces our view that consumers care about range and price as well as having access to the recent content of major studios."
The pair have the rights to several other studios, including for movies such as the Twilight series and the recently-released The Hunger Games.
The inquiry also noted the launch of Sky's own internet-based service Now TV, which will offer Sky Movies without the need to take any other pay-TV content or subscribe to Sky's platform.
The Commission's decision to overturn its provisional findings was criticised by BT, which said recent market developments did not alter the fact that Sky holds all the exclusive first-run rights for the major Hollywood studios.
It said in May: "Like BT, new entrants are still locked out of the chance to offer their customers the most recent films on subscription."