The Competition Commission of Pakistan (CCP), in its recent decisions, has explicitly discouraged the practice of using the term ‘Big Four’ in commercial covenants to appoint firms for assurance or financial services.
The term ‘Big Four’ refers to the four large firms that offer assurance, consulting, financial advisory, risk management, and tax services, globally as well as locally.
The commission made this observation while reviewing the application from MNT Halan Pak B.V. and later in another application from Advans S.A. SICAR. Both applicants while seeking exemptions on certain restrictive clauses in their agreements entered into with third parties, had used the term ‘Big Four’ for engaging in financial and other services.
The CCP has explicated that the selection process for any financial or assurance services should not be specified or limited to the ‘Big Four’ in agreements. Pertinent to refer that use of any term or condition that is inherently restrictive and impedes open and fair competition in the relevant market is not admissible under the Competition Law.
In both cases, the CCP issued directives that the selection process for financial or assurance services should not be limited to the ‘Big Four’ as it undermines fair competition and could distort the competitive landscape for these services.
Presently, the Institute of Chartered Accountants of Pakistan (ICAP) maintains a list of 130 CA firms with satisfactory Quality Control Review (QCR) ratings.
The State Bank of Pakistan (SBP) maintains a panel of 46 auditors under Section 35(1) of the Banking Companies Ordinance, 1962, categorized into three categories A, B, and C.
Furthermore, the Securities and Exchange Commission of Pakistan (SECP) has an approved list of auditors pursuant to section 48 of the Insurance Ordinance for the audit of insurance and takaful entities.
Notably, none of these lists have specified or implied the use of the term ‘Big Four’.
Under the Competition Act, of 2010, limiting the provision of services to a selected group of undertakings violates the principles of open and fair competition.
Through its directions in both the above cases, the CCP has upheld and emphasized fostering open competition across all spheres of commercial and economic activities in the country.
Besides, CCP underscores the importance of transparent and open selection processes to ensure a level playing field for all firms in the relevant market.
