Thursday 25 May 2017

UK anti-trust regulator to probe market dominance of 'Big Four' accounting firms

Erik Larson

Britain's anti-trust regulator said it will decide this month whether to open a probe into market dominance by the "Big Four" accounting firms, focusing on bank loans that force borrowers to use the largest auditors.

A UK House of Lords committee investigating the financial crisis said in a March report that the firms, which audit 99 of the 100 largest UK companies, should be probed by the London-based Office of Fair Trading (OFT) to determine whether their market dominance wrongfully limits choice.

The probe could be the most high-profile for the agency since it investigated banks' equity underwriting practices -- an inquiry that closed without any action being taken.

The OFT would help determine whether loan terms unfairly favour Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG, said Robert Bell, an anti-trust lawyer in London with Speechly Bircham.

The agency, which has kept the industry under review since 2002, will make a decision on the probe later this month, said spokeswoman Kasia Reardon.

"The requirement by banks to use one of only four accounting firms does suggest there's some restriction or distortion of competition," Mr Bell said.

"Whether that can be objectively explained away is something they would be looking at."

An investigation by the OFT would "bring to a head the long-running debate on competition and choice," said Mark Hamilton, a London-based KPMG spokesman. (Bloomberg)

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