UK: Competition Commission update regarding statutory audit services market investigation

The Competition Commission has published a short progress report with regard to its statutory audit services market investigation: see here (pdf). Initial (but not necessarily final) views are offered by the Commission in this report, including: there is a distinct market for the supply of statutory audit services to FTSE350 companies, separate from the supply of the same services to private and smaller listed companies; there are barriers to entry which limit the ability of Mid Tier firms to constrain the competitive offerings of the Big Four firms; and there is a clear information asymmetry between shareholders (as principals) and auditors (as agents).

The Commission has also published further working papers, including the following (each in pdf): Nature and strength of competition in the supply of FTSE 350 audits; Profitability (part one); Price concentration analysis; Evidence relating to the selection process: tendering, annual renegotiations and switching; Evidence of tacit coordination; and Barriers to entry: international networks.