Magic circle firms among line-up advising on accountancy competition probe
Linklaters, Clifford Chance and Freshfields Bruckhaus Deringer are among a host of firms acting for accountancy giants embroiled in an ongoing Competition Commission investigation.
March 15, 2012 at 07:21 AM
2 minute read
Linklaters, Clifford Chance and Freshfields Bruckhaus Deringer are among a host of firms acting for accountancy giants embroiled in an ongoing Competition Commission investigation.
Ashurst, Norton Rose, Berwin Leighton Paisner and Hogan Lovells are all also advising various UK accountancy firms, which have come under recent scrutiny due to the overwhelming dominance of the so-called 'Big Four' accountants at the top of the market.
Ninety-nine of the FTSE 100 are audited by the 'Big Four' – PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young – with major companies only changing auditor once every 48 years on average.
PwC, the UK's largest accountancy firm by revenue, has instructed Norton Rose, with a team led by global antitrust, competition and regulatory head Martin Coleman and contentious competition partner Peter Scott.
Linklaters competition partner Michael Cutting is acting for KPMG, while Freshfields is advising Deloitte, fielding a team headed up by competition partner Deirdre Trapp.
The smallest of the Big Four, E&Y, has instructed Hogan Lovells partners Lesley Ainsworth and of counsel Chris Hutton. Mid-tier firm Grant Thornton is being advised by Duncan Liddell of Ashurst, while BLP partner Adrian Magnus is acting for BDO and Clifford Chance is working with Mazars.
The Competition Commission investigation into the Big Four's dominance was launched last year, following a preliminary inquiry by the Office of Fair Trading which concluded: "The market for large company audits lacks sufficient competition and does not work well for customers. It is highly concentrated, largely supplied by four big firms, with clients rarely switching between auditors.
"There are also high barriers to entry for new and smaller competitors. These are not the indicators of a competitive market," it stated.
Mid-market players argue barriers to entry – such as bank covenants forcing companies to hire a Big Four firm – create an unfair playing field, but the Big Four claim competition is fierce and risk-averse clients choose them for peace of mind.
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