Following the provisional decision to refer the market for statutory audit services to large companies to the CC (reported in our July 2011 bulletin) and the closure of a public consultation on that provisional decision in September, the OFT has now referred this market to the CC.
There are only four large players in the market (Deloitte, Ernst & Young, KPMG and PwC) and these players earned 99% of all the audit fees paid by FTSE 100 companies in 2010. The OFT says that there are substantial barriers to entry and switching (the OFT found the average annual switching rate among FTSE 100 companies was 2.3%).
The CC will analyse the OFT's work and is inviting initial submissions from interested parties, by 11 November 2011, to help it identify the key issues before it releases an issues statement formally setting out the scope of the investigation. The CC has a maximum two year period in which it is required to reach a decision and publish its report.