July 29, 2011 / 2:34 PM / 9 years ago

OFT confirms competition probe of audit market

LONDON (Reuters) - The consumer watchdog confirmed plans for a competition probe into the Big Four accountancy firms’ stranglehold over the market for blue-chip company audits.

A full competition inquiry is needed to settle concerns that the top firms’ dominant position keeps rivals out and makes it harder for companies to switch auditors, the Office of Fair Trading said on Friday.

“We believe at this time that a reference to the Competition Commission is an appropriate response to our long-standing competition concerns in this market,” said OFT Executive Director Clive Maxwell.

The OFT said in May that there were grounds for a competition investigation. The watchdog will consult auditors and their customers for another six weeks before reaching a final decision on whether to proceed.

The Big Four auditors — KPMG [KPMG.UL], Ernst & Young ERNY.UL, Deloitte DLTE.UL and PricewaterhouseCoopers PWC.UL — check the books of most of the world’s biggest companies.

In 2010, they audited 99 of the companies in the FTSE 100 share index. Those companies changed auditors every 48 years on average, according to a parliamentary report in March that called for the sector to be investigated.

Reporting by Myles Neligan

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