Date of reference: 21 October 2011
The OFT has kept the accountancy and audit market under review since 2002. The audit market was the subject of an inquiry by the House of Lords Economic Affairs Select Committee from July 2010 to March 2011. The OFT made written submissions to that inquiry and appeared to give oral evidence. Before deciding provisionally on whether or not to make this reference, the OFT held three roundtables and a significant number of bilateral meetings with interested parties. These meetings explored whether, in practice, potential remedies would be available to the Competition Commission and whether or not a reference would be appropriate.
Following the provisional decision, the OFT held a six-week public consultation.
The OFT has referred the market for statutory audit services to large companies in the UK to the Competition Commission for detailed investigation. The OFT has been concerned for some time that the market is highly concentrated, with substantial barriers to entry and switching. Following its roundtable and bilateral discussions, and having deliberated the evidence obtained, the OFT is satisfied that there is a reasonable chance that appropriate remedies will be available to the Competition Commission in the event that its inquiry finds one or more adverse effects on competition. The OFT also notes that legislative initiatives with the potential to reform the provision of statutory audit services across Europe are expected to emerge from the European Commission before the end of the year. The OFT considers that the Competition Commission may, as it sees fit, engage with or feed into that legislative process.
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