THE COMPETITION Commission said its probe of the country’s market for company audits had not uncovered any evidence so far of collusion among the Big Four accounting firms over market share.
Yesterday’s paper is the watchdog’s first comments of substance since it formally launched its investigation last year, with preliminary findings due in November.
The probe looks at how the country’s top 350 listed companies buy audit services, and the commission’s latest working paper studied whether the Big Four accounting firms – KPMG, Ernst & Young, PricewaterhouseCoopers and Deloitte – had an understanding over dividing market share.
“Accordingly, whilst many of the market conditions conducive to tacit collusion in relation to market share appear to be satisfied, we do not currently have the further evidence necessary to establish that there has been tacit coordination,” the commission said in a paper yesterday.
The paper will be welcomed by the Big Four, which check the books of nearly all of Britain’s blue chip companies and say the market is highly competitive, as shown by more frequent tendering and rising pressure on fees.
Smaller auditors such as Grant Thornton are set to be disappointed, having told the watchdog the highly concentrated market makes it easier for accounting firms to monitor their rivals.
Some firms have asked that the Big Four firms’ pricing of audit services are scrutinised by competition bodies.
Many companies have been using the same auditor for decades, prompting UK lawmakers to call for the competition probe in the first place.
The European Commission has also proposed a draft EU law to create more choice of auditor for companies.
The UK watchdog said its view on tacit collusion could change if its ongoing probe came up with new evidence.
Between 2002 and 2010, the Big Four firms have consistently carried out the audits for more than 90 per cent of FTSE 350 companies, the commission pointed out.