The UK Competition Commission has outlined the
areas it will investigate in its probe into statutory audit market
concentration for listed companies.
In its initial issue statement, the commission
said the body will look at any “features of this market which
prevent, restrict or distort competition and, if so, what action
might be taken to remedy them”.
The commission has spent the past couple of
months gathering information, views and evidence to develop a scope
for the investigation.
In October, the Office of Fair Trading (OFT)
recommended the watchdog investigate the market after concluding it
is highly concentrated “with low levels of switching and
substantial barriers to entry”.
In a similar vein to the House of Lords audit
inquiry and the OFT’s own investigations, the commission is to look
at suboptimal audit quality and levels of innovation due to
concentration, higher prices and costs due to intense competition,
and the effects of offering non-audit services to audit
services.
The Big Four has already issued opinion
letters, defending the level of competition in the market as
“sufficient and reflective of client needs”.
Yesterday, PwC UK board member for reputation
and policy Richard Sexton said the commission’s statement reveals
the body relied heavily on input from the OFT.
“We do not believe that the OFT analysis
provided an accurate picture of the nature and level of competition
in this market,” he said.
“We remain convinced that the thorough
analysis of the audit market which the Competition Commission is
about to perform will demonstrate that this is a highly competitive
market”.
The commission will issue its final report on
audit market concentration on 20 October 2013, although it will aim
to complete the investigation sooner.
