Audit referred 'provisionally' to Competition Commission
The Competition Commission will examine the audit market subject to a further six-week consultation by the OFT
THE OFFICE of Fair Trading has provisionally decided to refer the audit market to the Competition Commission, subject to a further six-week consultation.
It “has been concerned for some time” about lack of competition and barriers to entry and switching. This referral indicates hope that the commission has appropriate tools at its disposal to tackle the issues, something the OFT had questioned due to the Big Four‘s global reach.
Executive director Clive Maxwell said that a referral would give the body the opportunity to conduct a thorough investigation into anti-competitive elements and insisted that the OFT will consider all views gathered in the coming weeks.
Further consultation is standard procedure at the OFT: stakeholders are invited to submit written comments by 9 September and a final decision is expected before the end of the year.
Referral to the more powerful Competition Commission – which answers directly to parliament – could result in extreme measures to reduce the dominance of the Big Four, including the forced divestment of assets or large-scale break-up.
Deloitte said it is “supportive” of measures to increase the value of audit and welcomes measures to boost competition, but warned that changes should not harm audit quality or the “UK’s competitive advantages as a business location”.