E&Y and KPMG merger seeks Europe approval
KPMG and E&Y have submitted their merger plans to the European Commission, and expect to hear in March this year whether their proposals will be accepted.
“It is very much in the hands of the European regulators and the Department of Justice, which is the regulatory authority in the US,” said Alan Reid, chairman of KPMG Management Consulting. “KPMG’s headquarters are in Europe, so they may take a fairer view. It’s different from other major accounting and consulting firms; we are talking about the largest European accounting firm.”
Because of the stringent anti-competition laws, the firms cannot talk about their future together. But before the regulator gives the go-ahead, they can discuss how each business works and look at each other’s strengths and weaknesses. What is certain is that under European legislation the European regulator has to reply to the proposal within 30 days, even if that is to let the participants know that a four-month investigation is imminent.
“We’ll be doing the necessary ground work, but we cannot go ahead with plans about how we will operate after the merger until the regulator says we can,” Reid said.
As Price Waterhouse and Coopers & Lybrand filed the submission for the merger 15 days before KPMG and E&Y, Reid believes any decision by European regulator on the former may act as a precedent for KPMG and E&Y. In the interim the latter’s partners will vote on the merger; he expects the vote to go-ahead before the end of February.
“We’ve been working very hard on our people to focus on the business now rather than what life will be like post-merger,” he said.
KPMG’s consulting fee income in the UK has seen a radical increase.
Income from consulting was up 36 per cent to #153m at the end of September 1997.