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LONDON (Reuters) - Britain's Competition Commission is to publish a preliminary report next week suggesting that BSkyB's dominance in the pay-tv movie market has been weakened by new entrants, reducing the need to impose restrictions, The Mail On Sunday said.
"Following the entry of Amazon-owned Lovefilm and fellow U.S. operator Netflix into the market, both offering films online, the commission is likely to say Sky's position is no longer as dominant as previously thought," the newspaper said.
In August last year the regulator had said BSkyB's large subscriber base gave it an advantage that meant potential rivals found it difficult to bid successfully for the rights to first-run Hollywood movies.
This in turn meant consumers found little alternative to Sky Movies for new blockbuster films, it had said at the time.
However, online films rental company Netflix launched in Britain and Ireland in January, taking on BSkyB's premium drama and movies service and prompting Amazon's Lovefilm to offer a new cut-price service.
Netflix's chief executive Reed Hastings told Reuters at the time that BSkyB would be its main competition.
In response, the competition commission said in March it would broaden its probe to assess the impact of these new services on consumer use of pay TV services.
"After examining the effects of new competitors on the sector the commission is expected to change its mind," The Mail On Sunday said.
The newspaper report added that the commission is expected to publish its final recommendations in July.
No one at BSkyB, which is 40-percent owned by Rupert Murdoch's News Corp, was immediately available for comment.
Reporting by Adveith Nair; Editing by Greg Mahlich