Liberal Democrat shadow DTI secretary Vincent Cable – who has been calling for more competition in the supply of auditing, accounting and consultancy services under a Big Five regime – said: ‘Now that it is down to a potential [Big} Four the situation is even more serious because it undermines initiatives such as requiring the rotation of auditors which the profession is taking.’
Cable said that as long as there was a small number of firms, with limited opportunities for competition and rotation, there was a danger of cosy practices and collusion, adding that it was ‘worrying to have the market become narrower’.
He said he would prefer the authorities to take a tougher line and break up the larger firms, in particular PricewaterhouseCoopers, which is the biggest.
Cable said Hewitt had powers to refer the situation to the Office of Fair Trading (until the Enterprise Bill becomes law) ‘and request an investigation into the competition implications of the new arrangements’ – and he insisted that she use them.
He said he would seek to use opportunities during next week’s Commons question time on DTI matters to pursue the issue.
The LibDem MP spoke out after trade minister Melanie Johnston said, in reply to an earlier question about the extent of competition between accounting companies, that under UK legislation the director general of the OFT is responsible for monitoring markets and is best placed to consider these issues.
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