OFT Set to Refer Audit Market to Competition Commission
The OFT has provisionally decided to refer the market for statutory audit services to large companies in the UK to the Competition Commission for a market investigation. A final decision will be taken following a six-week consultation period.
The OFT has been concerned for some time that this market is highly concentrated, with substantial barriers to entry and switching.
In May this year, the OFT announced that it had made the provisional decision that the statutory test for reference to the Competition Commission had been met. However, before reaching a decision on whether or not to make a reference, it wished to explore in more detail whether there was a reasonable chance that appropriate remedies would be available to the Competition Commission. Since then it has held a number of roundtable discussions and bilateral meetings with interested parties to discuss whether there may be such remedies.
Clive Maxwell, OFT executive director, said: 'We have had valuable engagement with a wide range of industry participants over the last two months and, in light of those discussions, 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. A reference would give the CC the opportunity to conduct a thorough investigation into this market and determine whether there are any adverse effects on competition. However, we will of course consider any consultation responses before making a final decision. We anticipate announcing the final decision before the end of 2011.'
Written responses should be sent to the OFT before 9 September email@example.com.