PW and Coopers reject merger criticisms

There is widespread opposition to the consolidation of the Big Six firms, according to Research International, the firm commissioned by Deloitte & Touche to look into clients’ perception of the mergers.

Of the 600 responses received from Fortune 1,000 firms in Europe, the US, the Far East and Australia, 69 per cent of corporate executives and 79 per cent of bankers expressed concern that there would not be enough competition, lack of choice on the audit side and conflicts of interest.

While the research focused primarily on the audit side, firms that commented on merging the consultancy practices also expressed similar concerns.

But the four Big Six firms which aim to merge their businesses rejected the claims as flawed.

A spokesman for Price Waterhouse said given that the research came from Deloitte & Touche it was not a surprise to find that it was anti-merger: “We feel the research is flawed; to our understanding there were three types of interview technique used, which makes for the findings being somewhat confused.

“There is a difference between press generalisations and analysing the precise case needs of individual clients; when we got face to face with clients we got a different story,” said Vic Luck, managing partner of Coopers & Lybrand Management Consulting.

“When we explained the reason behind the merger people understood: the trend is for firms to have global coverage and this is in response to our clients. The fastest and best way of doing this is to merge with Price Waterhouse,” said Luck. “Banks also manage to have Chinese walls that preserve against conflicts, they are in exactly the same position as we are.”

While Luck acknowledged that the two firms grew by 20 per cent in the fourth quarter of 1997, he said that arguments put forward in the press that there would be restricted competition were not accurate and that the firms together would only have a 4 per cent share of the global market after the merger.

“Coopers & Lybrand and Price Waterhouse are the same scale as Andersen, so it would enhance competition,” said Luck.

The research coincides with the European Commission launching a detailed anti-trust investigation into the proposed merger. Luck expects to know the results in mid-May.