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COMPETITION LAW NEWS: EU Commission on the Big 4 Accountancy Firms

Sunday, 03 March 2013 17:37

Accountancy Firms - PWC, Ernst & Young, Deloitte and KPMG - deemed to be the "Big Four" have been subjected to heavy criticism by the European Commission on Competition for being dominant as auditors with a 90 per centum of the relevant market in the UK's stock market listed giant companies.The same four accountancy firms have been also criticized for not doing enough to warn of the financial crisis, missing the warning signals thereof.

Although the European Commission on Competition has sustained that such giant companies tend not to change their auditors and consequently, there were some ideas so as to encourage competition amongst accountancy firms, such as mandatory rotation of audit firms, the Big Four have argued that the market was indeed competitive, remarking that the mandatory rotation, should it ever be imposed, was not considered in the public interest especially when one could foersee that giant companies could be doubtful about the experience of smaller accountancy firms.

The criticism leveled by the European Competition Commission on the Big Four is carried in a preliminary report and a final version thereof is expected in October 2013.

Notwithstanding such criticism on the relative dominance of the Big Four, under European Competition Law to be in a dominant position on the relevant market is not deemed to be in breach thereof; only if such dominant position would be abused of. Moreover, no evidence of tacit collusion or rather concerted practices amongst the Big Four have been identified in breach of European Competition Law and principles.

Tanti-Dougall & Associates, Law Firm, can assist undertakings with competition law issues both before the local authorities as well as with representations before the European Commission and Court of Justice.