At long last Deloitte & Touche has received the green light to acquire the assets of Andersen UK after receiving regulatory approval from the European Commission.
Under the deal, Andersen UK partners and staff will join Deloitte & Touche.
Deloitte bid for Andersen’s UK business in April, after Andersen was unable to conclude a similar deal with KPMG. The deal was referred to the European Commission on competition grounds.
The green light will rocket Deloitte into the position of the UK’s second biggest audit firm and reduce the Big Five to four. Under the arrangement, Deloitte will take on Andersen’s physical assets as well as remaining partners and staff. The Andersen name is set to be dropped later in the year.
John Connolly, senior partner and CEO of Deloitte & Touche, was delighted by the EC green light, saying: ‘We can begin to implement our plans – to enable clients to benefit quickly from the enhanced capabilities of the new Deloitte.’
But now the acquisition of assets has been given the green light by the European Commission, there remains a question over whether the Office of Fair Trading can still become involved in the deal and or whether they will be looking into the Big Four from a competition point of view. The OFT had been involved in ‘liaisons’ with the EC during the European regulator’s investigation into this deal.
But with European officials satisfied with the creation of a Big Four, due to the inevitability of Andersen parts being taken by Big Four rivals in any case, the deal was passed.
And, as a result, according to a spokeswoman for the OFT there are at present no plans by the organisation to look at the Deloitte and Andersen tie-up in the near future.
The OFT could, in theory, take a look into the accountancy market, as it did several years ago when it undertook an inquiry into the Big Five.
But an OFT spokeswoman said: ‘There are certain sized deals, which trigger the EC triggers on turnover thresholds. Under section 1 (2) and 1 (3) of the EC mergers regulation these were triggered in this case but the conditions required were answered satisfactorily. We have not plans to look at the deal again in terms of merger, but cannot rule out looking at competition issues which may arise. We have the ability to look at competition issues and activities of companies in the accounting market.’
The reason for the deal being investigated under EU merger control law, was that the combined turnover of the firms as set out in Article 1(2)(a) of this regulation for the initial stage of implementation, must be lowered to EUR22bn at the end of that period.
This threshold, however, is set to be revised with the new threshold revealed over the next few weeks to its council.
But for now that is a side issue. And although the EC has given the greenlight, don’t be surprised if the OFT pops its head up in the near future with a few questions of its own.