UK launches probe into "big four" auditors

City A.M. Reporter
Competition authorities are to probe the stranglehold of the world's biggest accountancy firms on British blue-chip company audits after finding evidence of anti-competitive behaviour.

The Office of Fair Trading (OFT) said dominance of the sector by the so-called "Big Four" threw up barriers for rivals and made it hard for firms to switch auditors.

The auditors - KPMG, Ernst & Young, Deloitte and PricewaterhouseCoopers - check the books of most blue-chip companies around the world.

The latest move comes on top of criticism from some policymakers who blame accountancy firms for giving banks a clean bill of health just before they had to be shored up during the financial crisis.

Policymakers also worry markets could be destabilised if one of the four went under - repeating the collapse of Arthur Andersen in 2002, which shrank the pool of big auditors from five to four.

The European Union's executive European Commission is set to publish draft legislation later this year to boost competition in the sector.

But past efforts to open up the industry have made little headway and critics say global action would be needed for such a small group of companies that span the world.d.

In 2010, the four audited 99 of the companies in the FTSE 100 index. Those companies changed auditors every 48 years on average, according to a parliamentary report in March that called for the sector to be investigated.

The OFT said on Tuesday there were reasonable grounds for suspecting features of the market "restrict, distort or prevent competition" in Britain.