On 21 October, the OFT announced that it had referred to the
Competition Commission the market for the supply of statutory audit
services to large companies in the UK. The OFT can make such a
reference when it has reasonable grounds for suspecting that any
feature, or combination of features, of a market in the UK
prevents, restricts or distorts competition.
There are only four large players in the audit market (Deloitte,
Ernst & Young, KPMG and PwC), who between them, it is
estimated, earned nearly 99% of all the audit fees paid by FTSE 100
companies in 2010, amounting to nearly £600 million.
The OFT has been monitoring the "Big Four" and the
accountancy and audit market since November 2002 and has been
concerned for some time about the high costs of switching between
auditors. The OFT found that the average annual switching rate
among FTSE 100 companies was 2.3%. It noted that there are
substantial barriers to entry and switching, in terms of gaining
relevant
