OFT to investigate Big Four accountancy firms

The Big Four accountancy firms are to be investigated by the Office of Fair Trading (OFT) over concerns that competition within the industry is being blocked.

The City watchdog claims that smaller firms are finding it hard to grow business as the market is so dominated by Deloitte, PwC, KPMG and Ernst and Young, which currently audit 99 of the FTSE 100 firms.

“We have been concerned for some time about the extent of competition, with only four large players and substantial barriers to entry and switching,” said Clive Maxwell, the OFT’s executive director.

“We believe that the statutory test for a Competition Commission reference has been met, but are keen to understand more about the remedies available in the market and, consequently, whether or not a reference to the Competition Commission would be an appropriate response to our concerns.”

The Big Four firms have so far welcomed the OFT’s consultation, with a spokesperson for KPMG saying it will conclude the long-running debate over domination of the accountancy sector.

A number of mid-tier firms have also welcomed the news, including Grant Thornton which believes a number of steps can be taken to level the playing field and improve competition.