Competition and Markets Authority case

Statutory audit services market investigation

The CMA has published its final order covering the remedies set out in its final decision taking into account statutory audit market reforms at EU level.

Administrative timetable

  • The administrative timetable below published on 17 January 2014 is indicative and has no statutory basis.
Phase 2 Action
Q4 2014 Anticipated commencement date
Q3 2014 Finalise and make orders
Q2/Q3 2014 Second informal consultation with key parties and 30-day formal public consultation on text of draft orders
Q2 2014 Redraft orders in light of finalised EU Audit reforms
January 2014 Consideration of responses to informal consultation and implications of EU proposals
November to December 2013 Drafting of CC Orders and informal consultation on draft orders with key parties
16 October 2013 Final report published

Phase 2

Date of referral: 21.10.11 Statutory deadline: 20.10.13


26 September 2014: Following consultation, the CMA has published its order covering the remedies as set out in the final decision.

24 July 2014: The CMA has published a draft order for consultation, following the Competition Commission’s investigation into the supply of statutory audit services.

Responses to formal consultation on draft audit order

Core documents

Provisional findings report


Working papers A - M

Working Papers are published to invite comments and assist the Inquiry Group develop its thinking on key areas. They should not be considered as containing the Group’s definitive views. For further information see the CCs Guidelines for Market Investigations (PDF, 675 Kb), draft for public consultation, in particular paragraphs 56 and 57.

Working papers N- Z

Working Papers are published to invite comments and assist the Inquiry Group develop its thinking on key areas. They should not be considered as containing the Group’s definitive views. For further information see theCCs Guidelines for Market Investigations (PDF, 675 Kb) , draft for public consultation, in particular paragraphs 56 and 57.



Audit public dataset

Case studies

CC-commissioned survey

On 1 February 2012 the CC, as part of its investigation into the statutory audit market in the UK, announced its intention to carry out a survey to collect information from companies who are subject to a statutory audit. Links to the survey outputs, produced by IFF Research, are given below. A link is also provided to the survey moderator report, produced by the Competition Commission’s independent quality assessor.

On the 26 October 2012 the CC announced its intention to carry out a follow-up survey with Audit Committee Chairs of FTSE 350 companies. Links to the survey outputs, produced by IFF Research, are given below.

Follow-up survey

Audit Committee Chair follow-up research

First survey

Five sets of tabulations, as follows (please note that rows that contain a single response have been removed to protect anonymity):

CC-commissioned research

Responses to notice of a further possible remedy

Responses to provisional decision on remedies.

Responses to provisional findings and notice of possible remedies

Aggreko Plc

Association of British Insurers

Association for Financial Markets in Europe - Provisional Findings & Remedies response

Barclays Bank


Berkeley Group Holdings Plc

BHP Billiton


British Bankers’ Association

BT Group Plc

Chartered Financial Analyst Society of the UK (CFA UK)

Canadian Public Accountability Board

Chartered Institute of Management Accountants

Chartered Professional Accountants of Canada

Confederation of British Industry

Confederation of Swedish Enterprise and FAR

Crowe Clark Whitehill


Ernst & Young

Financial Reporting Council

Financial Services Authority


GlaxoSmithKline Plc

Grant Thornton

Group A firms

Hermes Equity Ownership Services Ltd

Hong Kong Institute of Certified Public Accountants

The Hundred Group of Finance Directors

Independent Audit Limited

Institute of Chartered Accountants Australia

Institute of Chartered Accountants in England and Wales

Institute of Chartered Accountants of Scotland

International Federation of Accountants

Investment Management Association

Kingston Smith

Prof. Dr. Köhler , Annette (University of Duisburg-Essen)


Mr Laffin, Simon

Legal & General Investment Management

Lloyds Banking Group

Loan Market Association


National Association of Pension Funds Ltd

Mr Potts, Keith (FCCA FCMA MBCS J. Dip MA)


Rexam Plc

Royal Bank of Scotland

SABMiller Plc


Mr Shearer, Tony

Smiths Group Plc

Smith and Nephew Plc

South African Institute of Chartered Accountants

Tate & Lyle plc

The Sage Group PLC

Mr Thornhill, Martin

UK Shareholders Association

USS; RPMI Railpen; NEST; LAPFF; LPFA; Governance for Owners; Environment Agency Active Pension Fund; Sarasin & Partners LLP

Mr Watts, Garry - Chairman, BTG Plc and Chairman of Audit Committee, Stagecoach Plc

Responses to working papers A - M

Barriers to entry: international networks

Barriers to entry: reputation and experience

Bundling of audit and non-audit services

CC commissioned research: Report on Auditor Clauses in Loan Agreements, prepared by Cardiff Business School

Characteristics of long audit tenure companies

Competition Commission survey results

Descriptive statistics

Development of the statutory financial audit

Econometric analysis of audit costs

Economies of scale in operating costs

Engagement level profitability analysis

Evidence of tacit coordination

Evidence on switching costs (and implications for barriers to entry)

Evidence on trends in audit fees

Evidence relating to the selection process: tendering, annual re-negotiations and switching

Firms’ stated competitive strategies

Law and Regulation

Liability, insurance and settlements

Market Definition

Responses to working papers N - Z

Nature and strength of competition in the supply of FTSE 350 audits


Price concentration analysis

Profitability analysis – Parts One and Two

Restrictions on entry or expansion working paper

Review of evidence on the price effects of switching

The framework for the CC’s assessment and revised theories of harm working paper

The life cycle of FTSE 350 companies

The suppliers of statutory audit services to large companies

Views of investors and other stakeholders

Summaries of hearings held with parties

Responses to issues statement


Aviva Investors



Grant Thornton





News releases

Phase 1

Statutory audit

Date of reference: 21 October 2011

Action before reference

The OFT has kept the accountancy and audit market under review since 2002. The audit market was the subject of an inquiry by the House of Lords Economic Affairs Select Committee from July 2010 to March 2011. The OFT made written submissions to that inquiry and appeared to give oral evidence. Before deciding provisionally on whether or not to make this reference, the OFT held three round-tables and a significant number of bilateral meetings with interested parties. These meetings explored whether, in practice, potential remedies would be available to the Competition Commission and whether or not a reference would be appropriate.

Following the provisional decision, the OFT held a six-week public consultation.

Reasons for reference

The OFT has referred the market for statutory audit services to large companies in the UK to the Competition Commission for detailed investigation. The OFT has been concerned for some time that the market is highly concentrated, with substantial barriers to entry and switching. Following its roundtable and bilateral discussions, and having deliberated the evidence obtained, the OFT is satisfied that there is a reasonable chance that appropriate remedies will be available to the Competition Commission in the event that its inquiry finds one or more adverse effects on competition. The OFT also notes that legislative initiatives with the potential to reform the provision of statutory audit services across Europe are expected to emerge from the European Commission before the end of the year. The OFT considers that the Competition Commission may, as it sees fit, engage with or feed into that legislative process.

Key documents

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