1999/152/EC: Commission Decision of 20 May 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case IV/M.1016 - Price Waterhouse/Coopers & Lybrand) (notified under document number C(1998) 1388) (Only the English text is authentic) (Text with EEA relevance)
Date: 1998-05-20
Institutions: European Commission
Subjects: European Economic Area, economic concentration, management accounting, merger control, multinational enterprise, single market

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 20 May 1998

declaring a concentration to be compatible with the common market and the
functioning of the EEA Agreement

(Case IV/M.1016 — Price Waterhouse/Coopers & Lybrand)

(notified under document number C(1998) 1388)

(Only the English text is authentic)

(Text with EEA relevance)

(1999/152/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to the Agreement on the European
Economic Area and in particular Article 57(2)(a) thereof,

Having regard to Council Regulation (EEC) No 4064/89
of 21 December 1989 on the control of concentrations
between undertakings (1), as last amended by Regulation
(EC) No 1310/97 (2), and in particular Article 8(2) thereof,

Having regard to the Commission decision of 21 January
1998 to initiate proceedings in this case,

Having regard to the opinion of the Advisory Committee
on Concentrations (3),

Whereas:

(1)

On 11 December 1997, the Commission received
in complete form a notification of a proposed
concentration pursuant to Article 4 of Regulation
(EEC) No 4064/89, by which Price Waterhouse and
Coopers & Lybrand would enter into a full merger

(1) OJ L 395, 30. 12. 1989, p. 1; corrected version OJ L 257, 21.

9. 1990, p. 13.

(2) OJ L 180, 9. 7. 1997, p. 1.
(3) OJ C 56, 26. 2. 1999, p. 12.

(2)

(3)

for the purposes of Article 3(1)(a) of that Regula-
tion. Since the agreement in question was entered
into before l March 1998, the Commission applied
Regulation (EEC) No 4064/89 (hereinafter referred
to as ‘the Merger Regulation') as it stood prior to
the amendment made by Regulation (EC) No
1310/97.

After preliminary examination of the notification,
the Commission concluded that
the proposed
concentration could create or strengthen a dom-
inant position as a result of which effective
competition would be significantly impeded in the
common market or in a substantial part of it, and
as such raised serious doubts as to its compatibility
with the common market.

I. THE PARTIES

Both Price Waterhouse (‘PW') and Coopers &
Lybrand (‘C & L') are two of the so-called Big Six
audit and accounting organisations worldwide (the
other four being Arthur Andersen (‘AA'), Deloitte
Touche Tohmatsui International (‘DTTI'), KPMG,
and Ernst & Young (‘EY')).

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(4)

(5)

(6)

(7)

Both parties are active in the same fields of busi-
ness activity, that is to say, the supply of profes-
sional services, consisting of the audit of accounts
pursuant to audit requirements imposed by law
(‘statutory audit'), other auditing and accounting
tax compliance and
services,
advisory services,
the provision of management
consultancy services, including information tech-
nology, strategic planning and human resources,
the provision of corporate finance advisory services,
and the provision of insolvency services.

the provision of

II. THE OPERATION

On 17 September 1997, Price Waterhouse and
Coopers & Lybrand entered into an agreement by
which the two organisations will effectively merge
their global networks.

The proposed concentration will take the form of a
merger. As both organisations are international
networks of national offices, overseen by inter-
national bodies, their merger will be achieved by a
series of transactions and contractual arrangements
through which the two networks will be combined
worldwide. In practice, the parties will accede to a
new integrated structure (the ‘Combination Agree-
ment') which will reflect the existing structure of
the ‘PW Combination Agreement'. In practical
terms, the PW firms carrying on business in any
particular territory will merge with the C & L firms
which carry on business in the same territory.
Depending on national laws concerning the provi-
sion of audit and accounting services, in some cases
integration will be effected by a formal merger of
the relevant firms, in other cases by the acquisition
by one entity of the business and assets of the
other, while in some other cases the firms will be
formally dissolved and a new successor
firm
created. The new combined entities which will
result from the various local mergers will subse-
quently accede to the new ‘Combination Agree-
ment'.

III. THE CONCENTRATION

are

structured as

international
Both parties
networks of separate and autonomous national
firms operating under a common name and
observing common professional and service stand-
ards. Given this multi-partnership structure of the
parties, it is necessary to examine whether their
groups of firms can be regarded as single undertak-
ings for the purposes of the Merger Regulation,
whose combination would constitute a single

concentration within the meaning of Article 3(1)(a)
of the Merger Regulation.

(8)

(9)

As was mentioned in paragraph 6, the new entity
will be based on the structure of the PW combina-
tion. Starting from the premise that the result of a
concentration is a single undertaking, that is to say
a single economic entity, in order to determine
whether the transaction at issue is a merger for the
purposes of Article 3(1)(a) of the Merger Regulation
— that is, whether the combining of the activities
of previously independent undertakings would
result in the creation of a single economic unit —
it is therefore necessary to examine whether the
PW combination has a sufficiently high degree of
concentration of decision-making and financial
interests to confer on it the character of a single
economic entity for the purposes of the Merger
Regulation.

The PW group has achieved a significant degree of
integration, as its structure has evolved considerably
over the recent years. Before the creation of any
combination arrangements,
the PW firms func-
tioned as a network of firms operating under a
common name, and observing common profes-
sional and service standards. Each firm operated
principally in its own territory and a PW firm in
one jurisdiction would cross-refer work to a PW
firm in another jurisdiction where the opportunity
arose.

(10) As this structure proved unsatisfactory in terms of
transaction costs and resources deployment and in
order to remedy difficulties in organising opera-
tions at an international level, PW introduced a
new system under which a combination board
reviews and provides guidance to the national firms
essentially on all aspects of the conduct of their
business. The PW Europe
combination was
adopted in 1988 in order to allow the European
PW firms to operate in a manner which harmo-
nised the interests of proprietors of the individual
PW firms and promoted their collective interests,
thereby reducing their incentives to make business
decisions which promoted the interests of their
own firm at the expense of another combination
firm. Separately, PW US entered into bilateral
arrangements with other PW firms around the
world, including those in Mexico, India, Israel and
Japan, under which they agreed to pool resources
and coordinate their strategies to their mutual
benefit. Moreover, the PW Europe combination has
combination
recently

extended

been

in

a

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contract among the PW firms operating in Europe
and the USA. The combination has the effect that
the constituent PW firms function collectively as a
single economic unit. The combination comprises
PW firms in Western Europe, the USA, Eastern
Europe,
the Middle East, North Africa and the
Republic of South Africa.

(11)

[ . . . ] (1).

(12)

[ . . . ].

(13)

[ . . . ].

(14)

[ . . . ].

(15)

[ . . . ].

(16)

(17)

(18)

From the description in the preceding paragraphs,
it appears that the PW combination is characterised
by a significant degree of integration [ . . . ].

for

These features indicate considerable centralisation
of management and [ . . . ]. Therefore,
the
purposes of the Merger Regulation, the result of the
transaction in issue will be a single economic
entity, and the transaction constitutes a single
concentration to which PW taken as a whole
constitutes one party. In this respect, it has been
left open whether the C & L firms made up a
single economic entity, since in any case the series
of individual mergers between each of the national
partnerships of PW and C & L have been examined
as part of one single transaction between the two
groups of firms. Accordingly, the material scope of
the competitive assessment in this case covered all
the local mergers effected within the EEA.

IV. COMMUNITY DIMENSION

The combined aggregate worldwide turnover of
both parties is more than ECU 5 000 million
(namely Price Waterhouse: ECU 4 630 million,
Coopers & Lybrand: 5 305 million). The aggregate
Community-wide turnover of each of the parties
exceeds ECU 250 million (i.e. Price Waterhouse:
ECU 1 301 million, Coopers & Lybrand: 2 249
million). Moreover, even if the C & L partnerships
are to be treated as several distinct units, in at least
three Member States, namely the United Kingdom,
the Netherlands and Germany, they achieve turn-
over exceeding ECU 250 million (that is, ECU 772
million, ECU 299 million and ECU 487 million,
respectively). Furthermore,
the parties do not
achieve more than two thirds of their aggregate
Community-wide turnover within one and the
same Member State, nor do they achieve more than
two thirds of their EFTA-wide turnover within one

(1) This version of the Decision has been edited to ensure that

confidential information is not disclosed.

and the same EFTA State. Consequently, the noti-
fied operation is concentration with a Community
and EEA dimension.

V. COMPETITIVE ASSESSMENT

A. THE RELEVANT PRODUCT MARKETS

1. Areas of activity of the parties

Both parties to the concentration are active in the
provision of a broad range of professional services
to clients, which consist mainly of large companies,
of both a national and multinational dimension,
spanning a broad spectrum of business sectors, as
well as to clients in the public sector.

The parties divided the said range of professional
services into five broad service lines which they
consider to constitute the product markets relevant
to the case: audit and accounting; tax advisory and
compliance; management consultancy; insolvency;
and corporate finance advisory.

2. Relevant product markets

The market
investigation carried out by the
Commission broadly confirmed that the said five
product markets correctly categorised the main
areas of activity of the parties.

The Commission, however, identified two distinct
markets within the area of audit and accounting
services:
(i) a market for the provision of these
services to medium and small-sized companies,
which consist mainly of national companies, and
on which the Big Six firms are active together with
the ‘second tier' of audit and accounting firms; and
(ii) a market for providing audit and accounting
services to quoted and large companies, whether
national or multinational in dimension, which are
predominantly provided by the Big Six firms.

The Commission identified the possible existence
of still narrower markets for the provision of audit
and accounting services in some sectors, in par-
ticular the banking and insurance sectors.

Likewise, the Commission identified the possible
existence of another narrow market within the area
of the provision of tax advisory and compliance
services, namely the provision of these services to
the large company clients of the Big Six.

The Commission opened proceedings as a result of
its concerns with regard to the competitive impact
of the operation on the market for the provision of
audit and accounting services to large companies
which are Big Six clients, and also owing to its

(19)

(20)

(21)

(22)

(23)

(24)

(25)

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concerns over the competitive impact on possible
markets for the provision of audit and accounting
services to certain sectors (in particular banking
and insurance) of the large company clients of the
Big Six, and on a possible market for the provision
of tax advisory and compliance services to large
companies which are Big Six clients.

(29)

(30)

the Commission,

in the course of

its
Likewise,
investigation, identified the Big Six as the main,
and indeed exclusive, providers of audit and
accounting services
to large national quoted
companies, not for regulatory reasons but because
the stock markets in general expect it.

Furthermore, the Commission was informed in the
responses to its market enquiry that it is mainly the
Big Six who have the depth of sectorial expertise
required by most of the large companies, whether
national or multinational, for the provision of audit
services in their particular sector. Such sectorial
expertise was found to be of particular importance
in the banking and insurance sectors, as will be
seen at paragraphs 35 et seq.

(31) Moreover, the market investigation of the Commis-
sion revealed that any audit firm aspiring to satisfy
the audit needs of large companies must be able to
deploy significant resources to satisfy the demands
of such clients.

(iii) Conclusion

(32) Consequently,

the Commission has identified a
relevant product market which consists of
the
market for the provision of audit and accounting
services to quoted and large companies, whether
national or multinational, and which are provided
predominantly by the Big Six firms as, in the main,
only they can satisfy the requirements of such
and
companies, namely to have
accounting services provided by a firm with the
necessary reputation in the financial markets (in
the case of quoted companies),
the geographic
breadth to cover their companies’ needs worldwide
(in the case of the multinationals), the depth of
expertise in their particular sector (large companies
in general and, in particular, regulated sectors such
as banking and insurance) and significant resources
(all large companies).

audit

their

(b) Sectorial audit and accounting services to
large companies which are Big Six clients

(i) Sectorial audit expertise

(33) Audit and accounting services are professional
services provided by firms with personnel who are
professionally qualified to carry out statutory audit
work. Such qualified auditors may be called on to
provide their services across a broad range of indus-
trial and business sectors, but the Commission’s
the tendency
market

investigation revealed that

(26)

(27)

(28)

(a) Audit and accounting services to large
companies which are Big Six clients

(i) Description of services

For the purposes of the present analysis, ‘audit and
accounting services' consist of the performance of
statutory and other audits of companies’ accounts
and other ‘audit-related' accounting services which
employ the auditor’s skills of reviewing business
transactions and accounting processes to check that
the transactions and their implications (in terms of,
among others, contingent liabilities, risks, future
revenues) are truly and fairly reflected in the
companies’ financial statements.

context of

‘audit-related'

accounting
In this
services, the parties also identified the accounting
services provided as including general accounting
advice, systems assurance, business risks assess-
ment, internal audit, due diligence work prepar-
atory to the acquisition of new businesses, the pre-
paration of
in connection with stock
exchange listings and post acquisition reviews,
among others.

reports

(ii) Large companies which are Big Six clients

The parties contended that
large multinational
companies who need access to the international
capital markets purchase audit services only from
audit firms with both an international network and
a recognised international reputation. This conten-
tion was corroborated by the different operators in
the market during the course of the Commission’s
market investigation. Furthermore, the said invest-
igation revealed that
the choice of such client
companies is largely limited to the six audit and
accounting firms known as the Big Six, as only
those firms have both the geographic coverage that
such companies require and the degree of credence
on financial statements required by the inter-
national capital markets.

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at a certain stage in their careers is towards speciali-
sation in a limited number of sectors, whereby they
gain additional professional expertise of a special-
ised nature. In this context it appeared that an
audit firm which has enjoyed a large presence in a
given sector over a long period of time builds up a
reputation for depth of expertise in that particular
sector.

(34)

In the light of
the Commission
this evidence,
considered the possibility that there were separate
markets for the provision of audit services in the
case of sectors where there were indications that
the sector’s
the particularly complex nature of
activities required a significant level of specialist
expertise on the part of the auditor. However, the
only sectors where the Commission’s market
investigation confirmed this possibility were the
financial sectors of banking and insurance. Indeed,
both clients and competitors concurred in distin-
guishing these
from all others,
two sectors
including the other regulated sectors and public
companies.

(37)

(ii) Banking and insurance audits

(35) Consequently,

the Commission considered the
possibility that there were relevant product markets
for audit in these particular sectors due to their
specific and complex nature as regulated financial
services sectors, and in particular the combined
strength the parties would have as a result of the
in some
proposed operation in these sectors
Member States. Furthermore,
already
mentioned, third parties in general coincided in
indicating to the Commission the peculiar nature
of these sectors.

as was

igation, had ample evidence from both the Big Six
firms and their clients of the relatively low degree
of importance of price as a factor in determining
the client’s decision with regard to either choosing
or retaining its auditor. In the case of banking and
insurance clients, the responses received by the
Commission showed that these clients practically
always consider price less important, and in many
instances ‘far less' important, than the other factors
sectorial expertise and reputation, discussed
of
above, or the incumbent auditor’s knowledge of
them as a client.

Furthermore, clients
indicated the need for a
comparatively long period of time for acquiring the
appropriate audit skills for these particular sectors.
Clients cited ‘start-up' periods which were mainly
in the range of two to three years for an alternative
Big Six firm to become competent to carry out
their audit adequately and stressed the ‘intangible'
costs to them in terms of disruption and invest-
ment of their management time. However, in the
present case, this situation is mitigated by the fact
that, as was confirmed by most of
the clients
consulted by the Commission, at least three if not
all the Big Six firms are regarded as valid altern-
ative suppliers. Furthermore, these clients expect
the new auditor
to absorb in their price the
switching costs of a financial nature associated with
any change of auditors. Nonetheless, given the
‘intangible' costs to them, banking and insurance
clients show a strong reluctance to change their
incumbent auditor, due also to the importance they
attribute to the factors of trust and confidence,
which are built up over long-lasting relationships
with their auditor, very often running into decades.

(aa) D e m a n d s i d e

(36)

The Commission consulted extensively the clients
of the Big Six in both the banking and insurance
sectors in the course of its in-depth market invest-
igation, given the indications it had received of the
particular importance of
the factors of sectorial
expertise and reputation for these sectors. The
examination of the replies of these clients revealed
the complex and individual nature of the audit in
both of these sectors and showed that, compared to
other sectors, the requirement of having the neces-
sary sectorial expertise in a given country, together
with sufficient specialist resources, both of which
intertwine with the corresponding sectorial audit
reputation in the market, outweigh price considera-
tions for the clients in both these sectors. Indeed,
the Commission, in the course of its market invest-

(38) However, in analysing the evidence it has gathered
during its market investigation, the Commission
has identified other factors which attenuate these
demand-side issues and which concern, in partic-
the perception of banking and insurance
ular,
clients with regard to two main elements:
(i) the
time needed for an alternative Big Six firm to reach
the same level of competence as their incumbent
auditor — the ‘start-up' period; and (ii) the clients’
reluctance, in any case, to change auditors, as is
described under paragraph 37.

(39) With regard to the first of these elements, the
Commission considers that the ‘start-up' periods
cited by clients need to be seen in the overall
context of a service which carries inherent in any
auditor/client change a certain initial period during
which the new auditor has to become acquainted
with the client as such and which involves a

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the differential

certain disruption and investment of the client’s
time, even where no change of sector is involved.
This fact is consistent with the importance attached
by clients to their incumbent auditor’s knowledge
of them as a client. Thus the Commission is of the
view that
introduced by the
‘learning time' due to a change of sector on the
part of
in the overall
‘start-up' periods cited by clients. Furthermore, the
Commission considers that the significance of such
periods has to be evaluated in the context of the
particularly lengthy auditor/client
relationships
mentioned above.

is marginal

the auditor

that

(40) With regard to the second of the elements, the
Commission considers
the reluctance of
clients to change auditors, in so far as it has been
attributed by clients to factors such as ‘trust' and
‘confidence' in their incumbent auditor, need also
to be put
into perspective in the context of a
service in which personal relations and personal
perceptions play an important role. In this context,
the Commission considers that these qualitative
factors of ‘trust' and ‘confidence', should also be
interpreted in the broader picture of any auditor/
client relationship, in which ‘trust' and ‘confidence'
have an inherent significance because of the very
nature of the audit service itself, independent of the
particular sector involved.

(43)

(44)

knowledge of the regulatory requirements which
this entails.

This situation was confirmed by the parties them-
these financial
selves, one of whom stated that
services sectors (banking and insurance)
‘require
special expertise because of higher inherent risk
in some institutions, complex transactions';
and,
the other party stated that ‘in the large firms and in
capital cities, the client base lends itself to the
formation of dedicated teams with specialist skills
and experience within particular industry sectors
(for example financial services). Staff will typically
join and develop their careers through to senior
management within these divisions'.

the

costs,

inherent

Furthermore,
in
financial
auditing clients in these sectors when the new
auditor lacks an adequate level of sectorial expert-
ise, are borne by the audit firm, which is expected
by the client to adjust its fees to absorb such costs
during the ‘start-up' period, generally two or three
years as mentioned under paragraph 37. Conse-
quently, an audit firm has every interest in having
staff with in-depth
available professional audit
expertise, in sufficient number, and with a proven
track record in the particular
sector, whether
banking or insurance, so as to be able to convince
the client that it is in a position to satisfy its needs.

(bb) S u p p l y s i d e

(41)

(42)

The Big Six firms, in response to clients’ expecta-
tions and demands, are organised internally on a
sectorial basis and this strategy is also justified by
their need to have sufficient sectorial expertise to
avoid any possible liability problems in these high-
risk financial services sectors of banking and insur-
ance.

The Commission had evidence during its market
investigation of a particularly high degree of
sectorial alignment of the audit staff of the Big Six
firms in the case of the banking and insurance
sectors, with their specialists in either of these two
sectors spending a proportionately larger part of
their professional
lives and working hours ded-
icated to them than to other sectors in which they
might be active. Furthermore, it emerged from the
replies of the Big Six firms that such a degree of
specialisation in these sectors is due to their partic-
ular complexity as financial services sectors, with
their higher inherent risks and added regulatory
together with the corresponding
responsibilities,

(45) Moreover, the Commission has been informed that
these financial services
the high-risk nature of
sectors can in itself constitute a deterrent to the
audit firm which lacks sufficient sectorial expertise,
as it has to evaluate in financial and reputational
terms the costs of taking on the responsibilities
involved, in particular in the case of large clients.

(46) However, it appears that sectorial expertise is avail-
able to all Big Six firms. This derives from the
following factors:

— most of the Big Six are already present in the
audit of these sectors, even if with different
strengths in different Member States,

— in nearly all Member States, all of the Big Six
have some level of sectorial expertise, due to
presence in a particular segment (for example
smaller banks or insurance companies, subsi-
diaries or branches of foreign companies, as
auditors on behalf of the regulators, etc.),

— sectorial expertise can also be acquired in a
given Member State simply by means of the
acquisition of a company by a client,

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— there is a significant number of non-financial
companies which have subsidiaries involved in
financial services (such as financing subsidiaries
of car manufacturers, payment cards or retail
banking subsidiaries of big retailers, etc.).
Sectorial expertise can therefore be gained by
auditing these subsidiaries,

— sectorial expertise in banking and insurance is
advisory
also obtained through non-audit
assignments such as management consultancy
in which all of the Big Six are involved,

— the Big Six firms have, with certain limitations,
opportunities
personnel
between countries or for poaching staff from
their competitors.

redeploying

for

(47)

It follows that the competitive potential of the Big
Six firms who have a smaller presence in these
sectors in a given country is not reflected by their
current share in these sectors. This finding has
been confirmed by an overwhelming majority of
banking or insurance clients who stated that they
would consider at least four of the Big Six as able to
audit them. Hence any of the Big Six could find
relatively easily the resources
to expand their
auditing activities in the banking and insurance
sectors.

(48) As a consequence of the above-described position
of the Big Six, some successful entries have been
made in the financial services sectors, including
PW in the insurance sector.

(cc) C o n c l u s i o n

(49)

The Commission, having considered all the above
factors, has concluded that the provision of audit
and accounting services to the banking and insur-
ance sectors does not constitute separate relevant
product markets for the purposes of assessing the
competitive effects of the present operation.

(50)

(51)

(c) Tax-advisory and compliance services to
large companies which are Big Six clients

(55)

Tax advisory services comprise advice on the struc-
turing of transactions and business organisations so
as to minimise tax liability, as well as dealing with
revenue/taxation
of
authorities
customers.

behalf

on

Similarly, compliance services comprise the provi-
sion of assistance in computing the quantum of tax
that clients are liable to pay and the preparation of
returns to the national revenue/taxation authorities.

(52)

tax advisory and
The parties contended that
compliance services are provided not only by audit
and accounting firms, including the ‘second-tier'
firms, but also by law firms. The Commission’s
investigation confirmed the parties’ contention that
the large company clients of the Big Six firms do
not necessarily limit themselves to their Big Six
audit and accounting services supplier
the
provision of such services.

for

(53) Consequently, the Commission has concluded that
there is not a relevant product market for the provi-
sion of tax advisory and compliance services to the
large companies which are clients of the Big Six in
audit and accounting services, as distinct from the
market for the provision of such tax services to all
categories of clients.

3. Conclusion on relevant product markets

(54) Given all the above factors, the Commission has
concluded that the relevant product markets for the
purposes of its competitive assessment in this case
are the markets for the provision of the following
services:

(i)

audit and accounting to large companies which
are Big Six clients;

(ii) audit and accounting to small and medium-

sized companies;

(iii) tax advisory and compliance (to entire market);

(iv) management consultancy;

(v)

insolvency;

(vi) corporate finance advisory.

B. THE RELEVANT GEOGRAPHIC MARKETS

1. Audit and accountancy services

(a) Regulatory

framework/national market

considerations

regulatory requirements

The provision of audit services is regulated across
the Community at the level of each Member State.
The national
stipulate
which types of entity must have a statutory audit,
the frequency of the audits, the type of auditor
eligible to conduct such a statutory audit,
the
professional qualifications which the statutory
auditor must have and the legal forms which audit
firms must assume. Moreover, while the clients
appoint
in several Member
States and for particular sectors (namely banking,
insurance and listed companies) approval by the

their own auditors,

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Official Journal of the European Communities

26. 2. 1999

(56)

(57)

(58)

corresponding supervisory body is required for the
appointment. Furthermore, some Member States
regulate the duration and renewal possibilities of
audit contracts. Yet another aspect of the provision
of audit services which is regulated is the freedom
to establish an audit firm, owing to the restrictions
on the ownership, management and legal form of
audit firms in the particular Member States.

The parties themselves recognised that the provi-
sion of audit and accounting services is highly
regulated at a national level and stated that this fact
‘suggests' national markets for the provision of such
services. However, they contended that such a def-
inition is primarily applicable in the case of the
auditing of ‘smaller companies, operating primarily
in only one country, and not
raising capital
through the international markets'.

(59)

(b) Multinational dimension considerations

Furthermore, the parties contended that, owing to
the increase in the number of companies with
requiring professional
multinational operations
services in several countries from a single provider,
the market for audit and accounting is taking on an
international dimension. The Commission, in its
analysis of the responses from the market operators
on the issue of the geographic scope of audit and
accounting services, took into account the question
of the international dimension raised by the parties
in the particular case of multinational companies
(supplied with audit and accounting services by the
Big Six), which form part of the client base in the
relevant product market retained for assessment in
this case.

(c) The testimony of the Big Six and their

audit clients

the analysis of

Such an analysis indicated that there is an ever-
increasing tendency on the part of multinational
Big Six clients to negotiate their worldwide service
needs with the partner firm of the Big Six located
in the country of the client’s parent company, in
the form of an ‘international package' negotiation.
However,
the responses to the
Commission, both from the Big Six audit firms,
including the parties themselves, and from the
clients of those firms in the course of the in-depth
market investigation, confirmed that, while such a
‘package', when it exists, constitutes in principle a
single package covering the offer of the potential
audit firm supplier in all the different national
locations in which the multinational client requires
the services concerned, it is, nonetheless, consti-

of

subsidiary

tuted taking into account both the needs of the
national
company
(including national regulatory requirements) and
the offer,
including fees, of the particular audit
partner firm which would potentially be providing
the services to that particular subsidiary.

client

the

Indeed, one of
to the operation
the parties
described the tender procedure as one of ‘central
negotiation with the parent company,
following
consolidation of
local estimates and negotiation
between local partners and the lead partner in the
country of the parent company', adding that ‘this
to approximately 90 % of
approach applies
tenders'. The other party stated that ‘on receipt of
an invitation to tender, the lead office identifies
offices, partners and teams to serve all the opera-
tions of the potential client. These offices are asked
to research the work to be carried out and prepare
an estimate of the scale value of time. Local scale
estimates are submitted directly to the lead office
on an audit to assist in setting the strategy for the
overall fee approach . . . if the total fee which is
quoted is less than the total scale fee estimated, any
discount is applied fairly to those offices participa-
ting'. This same party further stated that ‘subsidiary
management are often consulted by group manage-
ment as to what they think of the competing (audit)
firms' and that ‘the audit practice management in
territories where subsidiaries are located would be
consulted to ensure that local statutory and regula-
tory requirements are considered in preparing the
tender centrally and these technical aspects of the
tender offering would be handled nationally to
ensure compliance with the overall requirements'.

(60) Moreover,

its market

investigation,

several multinational clients of

the
parties, addressed by the Commission in the course
of
they
indicated that
including fees, with the
negotiate such services,
audit suppliers at a national
level, that is, their
subsidiaries deal directly with the national partner
firm, even if the final offer is often coordinated
and/or overviewed at a central
level. One such
multinational client, when stating that it consid-
ered the geographic scope of the market to be
national, confirmed that in the case of its company
‘the negotiation of audit fees for subsidiary under-
takings is the responsibility of subsidiary company
management'. Another multinational client of the
parties, while admitting that it did ‘centrally discuss
audit fees and quality issues', stated that it ‘agreed
price and conditions on a company by company
basis' as ‘each company bears its own costs for

26. 2. 1999

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Official Journal of the European Communities

L 50/35

(61)

these services and local management is normally
involved in the discussions and negotiations', and
that
it had ‘not negotiated any international
packages from any Big Six firm'. Yet another
multinational client of the parties stated that it
‘negotiated locally with the audit firms' and carried
out ‘no central negotiation on services'.

Furthermore, there is a factor which is common to
all multinational clients, which is their need, as
corporate groups, to have an audit carried out on
their consolidated accounts, which combines the
audit of the accounts of the parent company and of
its subsidiaries worldwide. As this consolidated
audit takes place in the national territory where the
parent company is located, the parent company’s
choice of auditor for this particular audit
(and,
consequently, for the audit of its group worldwide)
is influenced by its appreciation (in terms of, inter
alia, reputation and expertise) of the audit services
offered in this national
is
located. Indeed it appears that even a fairly strong
position in a particular country and in a particular
industry for the audit of subsidiaries of foreign
companies may well be accompanied by a relatively
weak position in the audit of companies operating
in the same industry and incorporated in the same
country.

territory in which it

(d) Decisive national market characteristics

(62)

The Commission, having taken into account all the
above factors in its analysis of the geographic scope
of the relevant product market in the present case,
identified in particular
the following ‘national
market' characteristics:

(a) national regulatory requirements which affect
both the demand (statutory audit requirements)
and supply side (professional qualifications of
the audit staff and restrictions on the freedom
to establish audit
in the particular
firms
Member States);

(b) the need on the part of

qualified

the audit service
provider for a local presence, with the necessary
professional
the
required depth of expertise (including regula-
tory knowledge) and the related ‘brand' recogni-
the countries in
tion/reputation in each of
which the audit and accounting service is to be
provided.

personnel

and

(e) Conclusion

(63) Given the abovementioned ‘national market' char-
acteristics and having taken all the other above-
described
the
into
Commission considers national markets to be the
relevant geographic markets for the purposes of

consideration,

elements

the present
assessing the competitive effects of
operation on the markets for the provision of audit
and accounting services.

2. Tax advisory and compliance services

level, and given that

(64) Given the specific requisites at the level of profes-
sional qualifications and expertise which exist at a
national
tax laws are also
specific to each country, the Commission considers
national markets to be the relevant geographic
markets for the purposes of assessing the compet-
itive effects of the present operation on the market
for the provision of tax advisory and compliance
services.

3. Management consultancy services

of

and

range

corporate

(65) Management consultancy services are provided to a
public-sector
wide
customers. The parties contended that
the only
factor limiting the ability to participate in this kind
of market is the need to have the appropriate skills
and resources demanded by clients, some of whom
have purely national or local needs whilst others, of
a multinational nature, have needs across several
national
the parties
contended that the market had both a national and
range of
an international dimension with a
including
suppliers competing at both levels,
specialist boutiques
level),
accounting firms and consulting firms (at both
levels).

(at a national/local

In this context,

locations.

(66)

(67)

The Commission’s market
investigation broadly
confirmed the above contentions of the parties.
However, given that the operation does not lead to
the creation or strengthening of a dominant posi-
tion on any alternative geographic market, as can
be seen in the assessment at paragraph 69 et seq.,
the Commission has decided to leave the precise
definition of the relevant geographic market for the
provision of management consultancy services
open in the present case.

4. Insolvency services

The parties described the provision of insolvency
services as regulated by national laws. While in-
solvency may occur on an international basis, the
appointment of a liquidator occurs on a national
basis according to the rules of each national juris-
diction. Furthermore,
the Commission’s market
investigation has confirmed the national nature of
this market. Thus,
the Commission considers
national markets to be the relevant geographic
markets for the purposes of assessing the competi-
tive effects of the present operation on the market
for insolvency services.

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Official Journal of the European Communities

26. 2. 1999

5. Corporate finance advisory services

(68) Corporate finance advisory services were found by the Commission in a previous decision
of 30 August 1993 (BHF/CCF/Charterhouse — Case IV/M.319) (1) to be provided in
national markets. Nonetheless, the parties contended that for some transactions the market
is international and the Commission’s market investigation confirmed the existence of
both national and international aspects to the provision of these services. However, given
that the Commission in its assessment below has concluded that the present operation
does not lead to the creation or strengthening of a dominant position on any alternative
market for the provision of these services, it has decided not to delineate any further the
relevant geographic market in the present case.

C. ASSESSMENT

1. Market characteristics

(a) Big Six accounting firms’ activities

(69)

Each of the Big Six now has a substantial business in all of the relevant product markets, as
the following table indicates (data for management consultancy, corporate insolvency and
corporate finance services are combined under ‘other').

Worldwide revenues 1996 (estimated)

Total

Audit/account-
ing

9,5

8,1

7,8

6,8

6,5

5,0

2,9

4,5

3,5

3,6

3,6

2,4

(billion USD)

Other

4,9

2,0

2,7

1,9

1,6

1,5

Tax

1,7

1,6

1,6

1,3

1,3

1,1

AA

KPMG

E & Y

C & L

DTTI

PW

Source: International Accounting Bulletin.

(70)

The following table shows the percentage of overall revenues (based on the figures above)
which each of the Big Six firms earns from the main product lines.

Percentage of total revenues earned

Audit/accounting

30,5

55,6

44,9

52,9

55,4

48,0

Tax

17,9

19,8

20,5

19,1

20,0

22,0

(%)

Other

51,6

24,7

34,6

27,9

24,6

30,0

AA

KPMG

E & Y

C & L

DTTI

PW

(1) OJ C 247, 10. 9. 1993, p. 4.

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Official Journal of the European Communities

L 50/37

(71) Although each of the Big Six is active in each of
the relevant markets, defined above under market
definition, it is to be noted that, in respect of each
market,
and
accounting market for large companies, the Big Six
face competition from a range of other service
providers:

from the Big Six audit

apart

— in respect of

tax advisory and compliance
the Big Six compete with other

services,
accounting firms, law firms and banks,

— in respect of management consultancy services,
the Big Six compete with numerous con-
sultancy providers such as McKinsey, Boston
Consulting Group, IBM, EDS, Bain & Co., etc.,

— in respect of corporate finance services, the Big
Six compete with numerous investment banks
and other
including Goldman
Sachs, Morgan Stanley, SBC Warburg Dillon
Read, etc.,

institutions,

accounts; another reason is that it takes a consider-
able amount of time, training, and other resources
for a client to ensure that a new auditor is suffi-
ciently familiar with his business assets and opera-
tions to be able to carry out a satisfactory audit with
risks to shareholders that remain within acceptable
limits.

(75)

to submit

In selecting an auditor, large companies generally
use a competitive tender process. Ordinarily, a
client will invite several firms (generally no more
than three or four)
initial proposals.
Based on these initial proposals, the client will
make the final selection. In selecting among these
firms, the client attaches importance to non-price
factors, as well as to the audit fee. The most im-
portant of these factors are the strength of the
firm’s network, the quality of its work, its reputa-
tion, the manner in which it proposes to perform
the work (including, for example the use of tech-
nology), and the experience and expertise of the
staff who will have responsibility for the audit.

— in respect of corporate insolvency services, the

Big Six compete with law firms.

(76)

(b) Audit and accounting services market

(72) As can be seen from the table provided above, audit
and accounting services provide about half of the
total revenues earned by each of the Big Six (apart
from AA, which is more weighted towards the
provision of management consultancy services).

(77)

(73)

(74)

In the Community (as well as countries such as the
USA), the laws as to audit requirements are gener-
ally well-developed and sophisticated and the
market for provision of audit services is a relatively
mature one.

The length of time for which audit appointments
are made varies from country to country (one year
in the UK for example; several years in other
Member States). The norm is for audit appoint-
ments to be renewed, and therefore the auditor-
client relationship is often long-term, lasting many
years or even decades. The Commission’s invest-
igation has revealed that one reason for this is that
a change of auditor may damage a corporate
client’s reputation or stock market rating, since the
investment community may suspect that there have
been disputes over financial reporting, and that
there may be a problem with the company’s

Even after a long-term relationship, a client may
decide to put out its audit contract to competitive
tender because it feels it can get better value else-
where or in order to constrain a threatened price
increase by its incumbent auditor, or when it is
itself involved in a situation of change, such as a
merger or acquisition. Therefore the price of audit
and accounting services is determined by compet-
itive tenders which occur over time.

The historic growth in demand for audit and
accounting services in most Member States has
been due to the implementation of Community
directives requiring certain companies to have their
accounts audited. Future growth in demand is
expected to come from increased demand for non-
statutory audit and accounting services as well as
structural
such as privatisation and
increased use of the capital markets for the raising
of finance.

changes

(78) Minimum requirements concerning professional
qualifications, personal integrity and independence
to be met by persons carrying out statutory audits
are laid down by the Eighth Company Law
84/253/EEC) (1).
(Council Directive
Directive
However,
that Directive does not contain any
specific guidance on many other questions that
surround the audit function. Some of the issues
concerned are regulated at national level or are the
subject of
self-regulation by the accountancy
profession. The issues typically covered by self-
regulation can be grouped in two main areas:
(independence,
professional
secrecy), and
competence, quality, professional
rules.
and
working

behaviour

reporting

rules

(1) OJ L 126, 12. 5. 1984, p. 20.

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Official Journal of the European Communities

26. 2. 1999

It is true that the matters covered by self regulation
vary throughout the Community. The actual rules
also vary from one country to another. However,
there is a growing tendency to adopt at national
level the rules which are elaborated at international
level, particularly by the International Federation of
Accountants
the
‘F(cid:130)deration des Experts Comptables Europ(cid:130)ens'
(FEE) is also involved in promoting the adoption of
international standards in Member States.

(IFAC). At European level,

(79) Membership of national self-regulating institutes is
typically exercised on an individual basis. But even
there, accountancy firms often play an important
role in the process of self-regulation because they
can afford the time and effort to participate in
working groups which prepare the rules. This is
even more so at international level. It is evident
that the largest market players can therefore play a
more influential role in IFAC and thus in the
setting of
level. As
national standards tend to be in line with IFAC
standards and as the same firms will often inter-
vene in the standard setting process at national
level, the influence of the large accountancy firms
in the process of standard setting cannot be under-
estimated.

standards at

international

(80)

The Commission’s Green Paper on ‘the role, the
position and the liability of the statutory auditor in
the EU' (1) raises a number of questions concerning
audit regulation in the Community. The issue of
how to monitor self-regulation by the profession at
Community level will become more relevant when
the Community moves in the direction of a Single
Market on auditing, and in view of the increased
concentration of the sector.

2. Audit and accounting services — small and

medium-sized clients

(81)

The Commission’s investigation has revealed that
small and medium-sized companies do not require
the same level of resources (depth of expertise,
geographic spread, etc.) from their auditors as do
large companies. Thus, although they may in some
cases avail themselves of the services of the Big Six,
they are also served to a large extent by smaller,
‘second-tier' firms of auditors, which later provide
strong competition for the Big Six as far as small
and medium-sized companies are concerned. The
the
Commission has
operation does not give rise to any competition

therefore concluded that

(1) OJ C 321, 28. 10. 1996, p. 1.

(82)

(83)

(84)

(85)

concerns on the market for audit and accounting
services to small and medium-sized companies.

3. Audit and accounting services — large

company clients

relevant
The Commission considers
product market is the Big Six market for large
companies in audit and accounting services, and
that such a market is national in geographic scope
(see under paragraph 19 et seq.)

that

the

The fact that the relevant market is already highly
concentrated in that only the Big Six are able to
meet big company requirements in each Member
State, makes it appropriate for the Commission to
consider the possibility, as well as of the creation or
strengthening of a single dominant position, of the
creation or strengthening of an oligopolistic dom-
inant position as a result of the proposed merger
between PW and C & L.

In assessing the possible creation or strengthening
of dominance in this market the Commission has
used published data provided by the parties which
includes all clients of whatever size. The Commis-
sion considers this approach to be methodolo-
gically correct, since the relative proportions of fee
income are very similar from one member of the
Big Six to the other, both on this ‘all client' basis,
and on an exclusively ‘large company' basis.

(a) Single dominance

From Annex I it can be seen that the merged firms’
share of the market would not exceed 40 % in any
Member State. The three highest combined shares
are 38,6 % in Germany, 35,1 % in the UK, and
34,1 % in Ireland, where the nearest competitor
(KPMG) has 31,9 %, 22,7 % and 23,6 % re-
spectively. (At the European level the merged entity
would have 31,7 %, whilst its nearest competitor,
KPMG, has 25,9 %). Therefore, within any national
market, the merged firm would not enjoy a market
position such as to confer excessive market power
vis-a-vis its competitors or its clients.

(86) Moreover, as has already been mentioned under
paragraph 69 et seq., the norm is for an audit
appointment to be renewed over many years and to
be long-term, even lasting several decades. This
lack of market fluidity means that in addition to
market shares relating to a single year, it is neces-
sary to examine tender offers and bidding data over
a longer period in order to appraise more fully the
nature and extent of the competitive process in the
Big Six market for large companies.

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Official Journal of the European Communities

L 50/39

(87)

The Commission’s investigation has revealed that although tender offers are not a frequent
occurrence, when a client does decide that a change of auditor may be appropriate and
launches a tender process, there is competition in the form of bids from other members of
the Big Six. Clients are well-informed buyers and are well aware of price, quality and value
in relation to the service offered. The fact that normally three or four members of the Big
Six make offers when tenders are launched makes it clear that to an extent clients are able
to use the implicit threat of going to tender to constrain the power of their incumbent
auditor.

(88) An analysis of recent tender offers gives the following results

Big Six wins and losses: EEA 1994-97

Wins
(1)

Losses
(2)

Net Wins/
Losses
(3)

Net Ranking
(4)

44

45

36

26

18

18

20

25

23

22

17

20

24

20

13

4

1

–2

1

2

3

4

5

6

AA

KPMG

C & L

E & Y

PW

DTTI

Source: Deloitte Touche.

(89)

The above figures include switches of clients both between the Big Six themselves and
between the Big Six and ‘second-tier' auditors. They indicate that there are over a period of
time, significant client switches between audit firms and that on a ‘net win/loss' basis C &
L and PW ranked only third and fifth respectively as far as the Big Six were concerned.

(90) A further analysis of the total wins (column l ) indicated in the above table gives the
following ranking of Big Six firms in terms of wins from other members of the Big Six.

Intra-Big-Six wins: EEA 1994-97

Wins from other Big Six
(1)

Ranking (Column 2)
(2)

AA

KPMG

C & L

E & Y

PW

DTTI

Source: Deloitte Touche.

22

17

17

13

8

8

1

2

3

4

5

5

(91)

For the period in question, C & L and PW ranked only second equal and fifth equal
respectively as far as the Big Six were concerned.

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Official Journal of the European Communities

26. 2. 1999

(92) As an example of switching at the Member State level, the following data are available for

the UK.

Number and direction of intra-Big-Six auditor changes 1993-97 for top UK 1600 companies

CL

PW

KPMG

E & Y

DTTI

AA

F
R
O
M

CL

—

3

4

3

1

1

— TO —

PW

KPMG

E & Y

DTTI

AA

TOTAL

2

—

5

2

3

3

6

2

—

1

2

3

1

2

1

—

—

1

5

6

1

—

—

—

—

7

4

—

7

4

1

—

16

19

8

17

10

7

8

69

TOTAL

12

15

14

(Source: UK OFT)

(93)

It can be seen that as far as wins are concerned, PW (with 15) and C & L (with 12) ranked
second and fourth respectively. C & L was the firm that suffered the greatest number of
losses (19). A ranking by net wins (= wins minus losses) gives the following results.

Points

1

2

3

4

5

6

Firm

AA

PW

DTTI

KPMG

E & Y

C & L

Net wins

+8

+7

0

–3

–5

–7

Conclusion

(94)

From the above data concerning both market shares and the outcome of Big Six bidding
activities over a period of years, it is clear that the merged firm will be constrained by the
competitive behaviour of the remaining four large accounting firms. It can therefore be
excluded that the merger would create or strengthen a position of single dominance within
any of the national Big Six markets for large companies in audit and accounting services
within the EU.

(b) Oligopolistic dominance

(i) Existing collective dominance

(95)

In an oligopolistic market the pre-existing characteristics which would raise the issue of
collective dominance have been described in previous Community merger decisions, such
as Commission Decision 97/26/EC (Case IV/M.619 — Gencor/Lonrho) (1).

(1) OJ L 11, 14. 1. 1997, p. 30, at paragraph 141.

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Official Journal of the European Communities

L 50/41

(96) On the demand side, there is moderate growth and
inelastic demand. The supply side is highly
concentrated with high market transparency for a
homogeneous product, mature production tech-
nology, high entry barriers (including high sunk
links. These
costs) and suppliers with structural
supply
for
easy
it
characteristics make
suppliers
to engage in parallel behaviour and
provide them with incentives to do so.

side

(97)

Some of these elements characterise the Big Six
audit and accounting market for large companies.

(aa) S t a g n a n t d e m a n d

(98) According to the notification submitted by the
parties, the demand for audit services is ‘growing
throughout the EEA, but more slowly than the
demand for some other professional services'. The
parties estimate that ‘future growth in demand is
projected to come from increased demand for non-
statutory audit and accounting services. By compar-
ison, very strong growth is predicted for manage-
ment consultancy services in Europe as a whole'. It
is clear that
the Big Six audit and accounting
market for large companies is not going to enjoy
strong growth rates in the foreseeable future, and
that anyway, given the very large individual size of
the companies which constitute the client base, the
latter is not of a kind such as will generate growth
by virtue of an increase in the population of the
client base itself. It may therefore be concluded
that demand in the relevant market is likely to
remain, at best, slow-growing.

(bb) P r i c e i n e l a s t i c i t y o f d e m a n d

(99)

The price elasticity of demand in the market in
question is low. This is due to the fact that clients
are statutorily obliged to purchase the service, that
costs are incurred in switching between suppliers
in any event audit and
(see above) and that
accounting fees constitute a minute proportion of
the total costs of Big Six clients, given the size of
these client companies; price is cited by clients as
the least important criterion for choosing suppliers.
(Nevertheless, demand is to some extent price
elastic, as is evident
that some
switching does occur when tender offers are made,
as indicated at paragraph 88.)

from the fact

(cc) H o m o g e n e i t y o f p r o d u c t s , m a r k e t
o f

l o w r a t e

a n d

t r a n s p a r e n c y ,
i n n o v a t i o n

(100) Audit services are relatively homogeneous, in that
any audit performed will involve standard checks,

reasonably

transparent

analyses, reports, and other relevant elements as
provided for by national regulations and institu-
tional self-regulation. The Commission’s invest-
igation has revealed that the vast majority of clients
consider all members of the Big Six to be inter-
changeable. Again, the Commission’s investigation
has revealed a significant degree of price transpar-
ency, in that the hourly rates charged for audit
services
between
are
the Big Six. Costs are transparent
members of
between members of the Big Six, in that salaries
and labour costs, which constitute well over half of
total
from recruitment
transparent
publicity and inter-firm personnel transfers. Again,
transparency will be increased in some countries by
additional factors, such as the publication of the
level of audit fees in the clients’ annual report in
the UK, and the statutory requirement for dual
auditors in other countries. Furthermore the meth-
odology of audit and accounting services changes
little over time, and is characterised by a low rate of
innovation.

costs,

are

(dd) S t r u c t u r a l

l i n k s b e t w e e n s u p p l i e r s

(101) The existence of economic or

structural

links
between suppliers may contribute to the existence
of oligopolistic dominance. Such links exist in the
audit and accounting sector, since the sector is
professionally self-regulated via
institutions of
which the audit firms are members (see paragraphs
78, 79 and 80). Accounting firms are represented in
the institutions responsible for matters of self-regu-
lation, and their representatives will meet on a
regular basis to discuss and decide self-regulation
importance to all
issues which are of crucial
firms will have a
concerned. Since the largest
particularly influential role in the setting of the
standards concerned (see paragraph 79), they are in
a position to use such influence to develop a
system of standards which may in practice con-
tribute to the creation of oligopolistic or collective
dominance between themselves.

(102)

It is clear therefore that the Big Six audit and
accountancy market for large companies is to an
extent characterised by elements which could
contribute to a situation of collective dominance.

(103) However, the Commission has found no conclusive
proof that such dominance exists at present in the
Big Six market. The Commission’s investigation
revealed no indication that Big Six large company
audit clients believe that collective dominance
prevails at present. From a general viewpoint,
collective dominance involving more than three or

L 50/42

EN

Official Journal of the European Communities

26. 2. 1999

four suppliers is unlikely simply because of the
complexity of the interrelationships involved, and
the consequent temptation to deviate; such a situ-
ation is unstable and untenable in the long term.
More specifically, as has been demonstrated above,
the current Big Six market for large companies
seems to be competitive over time, in that clients
do put out tenders, and intra-Big Six switches do
occur.

(104) Furthermore,

the judgment of

the Court of 31
March 1998 in Joined Cases C-68/94 and C-30/95,
France v. Commission and SCPA and EMC v.
Commission (1),
und
concerning
has
case
Salz/MdK/Treuhand
emphasised that there is a strong burden of proof
on the Commission in the case of an oligopolistic
market which the Commission holds to be subject
to collective dominance.

the Kali
(IV/M.308) (2)

(105) The Court held that a high level of concentration
in an oligopolistic market is not in itself a deciding
factor as to the existence of collective dominance.
implies that
the Court’s judgment
In addition,
evidence of
the lack of effective competition
between a group of suppliers held to be collectively
dominant must be very strong, as must evidence of
the weakness of competitive pressure from other
suppliers (if there are any such in the market in
question).

(106)

In view of the above, the Commission considers
the
there is no conclusive evidence that
that
present concentration strengthens a situation of
pre-existing oligopolistic dominance in the Big Six
market for large companies.

(ii) Creation of collective dominance

(107) The Commission has considered whether the level
of post-merger supply concentration would be such
as to create a situation of collective dominance.

(aa) D u a l - m e r g e r

m a r k e t

s t r u c t u r e

( P W / C & L p l u s K P M G / E & Y )

(108) The possibility of the creation of collective dom-
inance in the Big Six audit market for large com-
panies was investigated by the Commission under a
‘dual-merger scenario', after KPMG and E & Y on
23 December 1997 jointly notified to the Commis-
sion their
intention to merge worldwide. The
Commission found it appropriate to analyse the
proposed PW/C & L concentration within the
context of the KPMG/E & Y operation, since under
the Merger Regulation the effects of merger opera-
tions are assessed in a perspective which is
projected into the future of the market, taking into

(1998) ECR I-1375.

(1)
(2) Commission Decision 94/449/EC (OJ L 186, 21. 7. 1994,

p. 38).

account not only the changes brought about by the
merger itself but also making allowance for future
development such as new entrants, liberalisation,
product
innovation and so on, and since the
KPMG/E & Y agreement was a well-known fact in
the market place.

(109) Under this ‘dual merger' scenario the combined
shares of the biggest two firms in the relevant
market would have been very substantial indeed at
national, Community and world levels. Moreover,
the two merged entities would have been the two
biggest firms in all but two Member States, with
very significant gaps with respect to the market
shares of the remaining suppliers.

(110)

In view of the high combined market shares which
would be held by the two merged firms and also of
the characteristics of the market in question as
enumerated in paragraphs 98-101, the Commission
reached the preliminary view that the PW/C & L
merger would create a level of supply concentration
taken together with the KPMG/E & Y
which,
merger, would be consistent with a hypothesis of
collective dominance. However, on 13 February
1997 KPMG and E & Y publicly announced that
they had jointly agreed to terminate their merger
plans.

(111) The merger of PW and C & L could in principle
lead to the creation of a dominant oligopoly,
involving parallel behaviour between most or all of
the resulting ‘Big Five', or a dominant duopoly, in
which the two largest
firms would engage in
parallel behaviour, whilst coercing the remaining
smaller firms.

(i) Oligopolistic dominance

from the existence of

(112) The risk of the creation of oligopolistic dominance
arises in large part
the
general characteristics described in paragraphs 98-
101. The risk is enhanced by a further character-
istic which is specific to this market, which is that,
as was described earlier (paragraph 74), relation-
ships between auditors and clients tend to be long-
term. Although a client may in principle have a
choice of six large auditing firms, for the reasons
given earlier, it may often not be convenient or
propitious to switch auditors during a considerable
period of time; indeed, most clients have indicated
that, in practice, when they decide that the time is
appropriate to put out
to
tender, at that particular juncture only three or four
suppliers are usually considered suitable, rather
than all six. Therefore any reduction in the number
of suppliers in the Big Six audit market for large
companies constitutes a further element which
might be conducive to collective dominance.

their audit contract

26. 2. 1999

EN

Official Journal of the European Communities

L 50/43

(113) However, the Commission’s investigation has not
led to the conclusion that the merger would create
a situation of oligopolistic dominance. As was
explained (paragraph 103), collective dominance
involving more than three or four suppliers is too
complex and unstable to persist over time. Again,
there seems to be competition in the existing Big
Six market in the form of tenders, although tenders
are fairly rare and, as said above, only three or four
of the Big Six usually participate in any one tender.
It is not likely that competitive tender offers would
disappear or be drastically reduced with a reduction
from six to five suppliers. This situation differs
from the structure that would have resulted from a
scenario (like the one initially
‘dual merger'
assessed by the Commission), where the number of
Big Six normally seen as suitable for invitation to
each individual tender would have been further
reduced from the current figure of three or four to
a figure leaving very limited, if any, effective choice
for the client.

(ii) Duopolistic dominance

(114) Annex II indicates, at national, European, and
worldwide levels, the pre- and post-merger (PW/C
& L only) shares of the biggest two auditing firms
of the market in question. Following the merger
the combined market shares reach 57,6 % for the
Community, 50 % worldwide, and between 51,1 %
and 70,5 % for individual Member States.

(115) The Commission’s investigation has not, however,
led to the conclusion that the PW/C & L merger
within the existing market structure would create a
position of duopolistic dominance.

(116) Although the merged entity, PW/C & L, is one of
the two biggest firms in every Member State except
Austria, the other of the biggest two firms varies
considerably throughout the Community. Of the
15 countries in which PW/C & L would be one of
the two biggest firms, the other would be KPMG in
eight countries, E & Y in three countries, AA in
three countries, and DTTI in one country (see
Annex II).

(117) As can be seen from Annex III, the post-merger
gap between the market shares of the second and
third biggest firms is not of significant size, being
over 10 % in only two Member States (Germany
and Spain), just over 10 % at the Community level
as a whole, and 3 % at world level. The proximity
in market shares between the second and third
largest firms makes it impracticable for the merged
PW/C & L entity to pursue a strategy of duopolistic
dominance, which would involve coercing or
squeezing out the third largest and smaller firms.

(118) Moreover, even though each country constitutes a
separate geographic market for the supply of audit
and accounting services (see under paragraph 19 et
seq.), it would not be feasible for PW/C & L to
adopt parallel behaviour in each country when
such parallelism would need to be with one of
several different
firms (KPMG, AA, E & Y or
DTTI), according to the country in question. It is
not realistic to suppose that a firm would accept
the possible benefits of parallel behaviour in one
country when it would be aware that parallel
behaviour between PW/C & L and a different firm
would be operating to its own detriment in another
country. Such a ‘multi-firm' parallel behaviour
would not be stable, certainly not over a period of
time.

(iii) Conclusion

(119)

In view of the continued post-merger existence of
no fewer than five suppliers, of the likely continued
participation of these five suppliers in the tender
offers which constitute the competitive process in
the relevant markets, and of the non-emergence of
any two clear leading firms following the merger;
the Commission has found no conclusive proof
that the merger would create or strengthen a posi-
tion of oligopolistic or duopolistic dominance
within any of the national Big Six markets for audit
and accounting services for large companies within
the Community.

4. Tax

services,
advice
management
services,
corporate insolvency services and corporate
finance services

and compliance
consultancy

(a) Tax advice and compliance services

(120) Accounting firms face strong competition from
each other and from law firms and banks in this
market. If market shares are calculated on a basis
which includes all suppliers,
the only Member
States where combined market shares will exceed
15 % are Spain (19,2 %) and Ireland (18,6 %).

(b) Management consultancy services

(121) Combined market shares will not exceed 15 % in
sector
any Member State. Competitors
include
and world-
renowned specialist companies such as McKinsey,
Bain and Co., Boston Consulting Group, and so on.

accounting

in this

other

firms

(c) Corporate insolvency services

(122) The only Member State where combined market
shares exceed 15 % is the UK (25,8 %). Compet-
itors include lawyers and other firms, as well as
accountants.

L 50/44

EN

Official Journal of the European Communities

26. 2. 1999

(d) Corporate finance advice

HAS ADOPTED THIS DECISION:

(123) Combined market shares are well below 15 % in
all Member States,
and the notifying parties
compete with the major commercial and invest-
ment banks.

(e) Conclusion

(124)

(125)

It is out of the question that the merger would
create or strengthen a dominant position in the
four
the
Community.

abovementioned markets

within

VI. CONCLUSION

a

It can accordingly be accepted that the proposed
transaction will not create or strengthen a domi-
nant position as
result of which effective
competition would be significantly impeded in a
substantial part of the common market. Pursuant to
Article 2(2) of the Merger Regulation and Article 57
of the EEA Agreement, therefore, the transaction
should be declared compatible with the common
market,

Article 1

The proposed concentration between Price Waterhouse
and Coopers and Lybrand, notified on 11 December
1997, is declared compatible with the common market
and with the operation of the EEA Agreement.

Article 2

This Decision is addressed to:

Coopers & Lybrand
1, Embankment Place
London WC2N 6NN
United Kingdom

Price Waterhouse
Southwark Towers
32, London Bridge Street
London SE1 9SY
United Kingdom

Done at Brussels, 20 May 1998.

For the Commission

Karel VAN MIERT

Member of the Commission

ANNEX I

Estimated percentage revenue share

Market structure before
C & L-PW merger

Market structure after
C & L-PW merger

(%)

Austria

Belgium

Denmark

Finland

France

Germany

Greece

Iceland

Ireland

Italy

Liechtenstein

Luxembourg

Netherlands

Norway

Portugal

Spain

Sweden

United Kingdom

Europe

World

Coopers &
Lybrand

Price
Waterhouse

C & L + PW

Ernst &
Young

KPMG

Arthur
Andersen

Deloitte
Touche

Pre-merger share of biggest

Post-merger share of biggest

10,0

17,6

17,9

29,2

14,3

33,5

18,9

10,2

14,5

16,1

: 10

19,0

23,1

20,6

17,7

12,5

30,0

19,3

21,9

18,0

10,6

11,1

8,6

3,5

11,2

5,1

8,1

0,0

19,6

12,6

N/A

11,0

3,0

6,9

14,8

18,6

4,0

15,8

9,9

12,0

20,6

28,7

26,5

32,7

25,5

38,6

27,0

0,0

34,1

28,7

0,0

30,0

26,1

27,5

32,5

31,1

4,0

35,1

31,7

30,0

23,1

26,4

13,8

15,1

13,3

11,4

15,7

N/C

14,8

18,7

N/A

15,0

25,0

23,6

26,3

16,1

23,0

16,6

15,7

17,0

31,6

19,5

29,3

29,5

34,5

31,9

17,2

; 20

23,6

16,5

N/A

13,0

26,6

16,1

13,0

14,0

27,0

22,7

25,9

20,0

8,9

12,1

8,5

14,9

15,7

9,5

27,3

10,2

13,4

25,1

N/A

8,0

2,9

17,0

22,1

31,7

5,0

13,1

13,8

17,0

15,8

13,2

21,9

7,8

11,0

8,6

12,8

10,2

14,0

11,1

N/A

23,0

19,4

15,8

6,1

7,1

11,0

12,5

12,7

16,0

31,6

26,4

29,3

29,5

34,5

33,5

27,3

23,6

25,1

23,0

26,6

23,6

26,3

31,7

30,0

22,7

25,9

20,0

KPMG

Ernst & Young

KPMG

KPMG

KPMG

Coopers & Lybrand

Arthur Andersen

KPMG

Arthur Andersen

Deloitte Touche

KPMG

Ernst & Young

Ernst & Young

Arthur Andersen

Coopers & Lybrand

KPMG

KPMG

KPMG

31,6

28,7

29,3

32,7

34,5

38,6

27,3

34,1

28,7

30,0

26,6

27,5

32,5

31,7

30,0

35,1

31,7

30,0

KPMG

C & L + PW

KPMG

C & L + PW

KPMG

C & L + PW

Arthur Andersen

C & L + PW

C & L + PW

C & L + PW

KPMG

C & L + PW

C & L + PW

Arthur Andersen

Coopers & Lybrand

C & L + PW

C & L + PW

C & L + PW

Source: IAB figures cited in form CO, p. 34.

2
6

.

2

.

1
9
9
9

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e
E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

L
5
0
/
4
5

ANNEX II

(%)

Estimated percentage revenue share

Market structure before C & L-PW merger

Market structure after C & L-PW merger

Coopers
&
Lybrand

Price
Water-
house

C & L+
PW

Ernst &
Young

KPMG

Arthur
Andersen

Deloitte
Touche

Pre-
merger
share of
biggest
2

First market share

Second market share

Post-
merger
share of
biggest
2

First market share

Second market share

Austria

10,0

10,6

20,6

23,1

31,6

8,9

15,8

54,7

31,6 KPMG

23,1 Ernst & Young

54,7

31,6 KPMG

23,1 Ernst & Young

Belgium

17,6

11,1

28,7

26,4

19,5

12,1

13,2

45,9

26,4 Ernst & Young

19,5 KPMG

55,1

28,7 C & L + PW 26,4 Ernst & Young

Denmark

17,9

8,6

26,5

13,8

29,3

8,5

21,9

51,2

29,3 KPMG

21,9 Deloitte
Touche

55,8

29,3 KPMG

26,5 C & L + PW

Finland

29,2

3,5

32,7

15,1

29,5

14,9

7,8

58,7

29,5 KPMG

29,2 Coopers &

62,2

32,7 C & L + PW 29,5 KPMG

Lybrand

France

14,3

11,2

25,5

13,3

34,5

15,7

11,0

50,2

34,5 KPMG

15,7 Arthur

60,0

34,5 KPMG

25,5 C & L + PW

Andersen

Germany

33,5

5,1

38,6

11,4

31,9

9,5

8,6

65,4

33,5 Coopers &

31,9 KPMG

70,5

38,6 C & L + PW 31,9 KPMG

Lybrand

Greece

18,9

8,1

27,0

15,7

17,2

27,3

12,8

46,2

27,3 Arthur

18,9 Coopers &

54,3

27,3 Arthur

27,0 C & L + PW

Andersen

Lybrand

Andersen

Iceland

Ireland

10,2

0,0

0,0

N/A ; 20

10,2

10,2

14,5

19,6

34,1

14,8

23,6

13,4

14,0

43,2

23,6 KPMG

19,6 Price Water-
house

57,7

34,1 C & L + PW 23,6 KPMG

Italy

16,1

12,6

28,7

18,7

16,5

25,1

11,1

43,8

25,1 Arthur

18,7 Ernst & Young

53,8

28,7 C & L + PW 25,1 Arthur

Andersen

Andersen

Liechtenstein : 10

N/A

0,0

N/A

N/A

N/A

N/A

Luxembourg

19,0

11,0

30,0

15,0

13,0

8,0

23,0

42,0

23,0 Deloitte
Touche

19,0 Coopers &

53,0

Lybrand

30,0 C & L + PW 23,0 Deloitte
Touche

Netherlands

Norway

23,1

20,6

3,0

6,9

26,1

25,0

26,6

2,9

19,4

51,6

26,6 KPMG

25,0 Ernst & Young

52,7

26,6 KPMG

26,1 C & L + PW

27,5

23,6

16,1

17,0

15,8

44,2

23,6 Ernst & Young

20,6 Coopers &

51,1

27,5 C & L + PW 23,6 Ernst & Young

Lybrand

L
5
0
/
4
6

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e
E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

2
6

.

2

.

1
9
9
9

Estimated percentage revenue share

Market structure before C & L-PW merger

Market structure after C & L-PW merger

Coopers
&
Lybrand

Price
Water-
house

C & L+
PW

Ernst &
Young

KPMG

Arthur
Andersen

Deloitte
Touche

Pre-
merger
share of
biggest
2

First market share

Second market share

Post-
merger
share of
biggest
2

First market share

Second market share

(%)

Portugal

17,7

14,8

32,5

26,3

13,0

22,1

6,1

48,4

26,3 Ernst & Young

22,1 Arthur

58,8

32,5 C & L + PW 26,3 Ernst & Young

Spain

12,5

18,6

31,1

16,1

14,0

31,7

7,1

50,3

31,7 Arthur

Andersen

Andersen

18,6 Price Water-
houise

62,8

31,7 Arthur

31,1 C & L + PW

Andersen

Sweden

United
Kingdom

Europe

30,0

19,3

4,0

15,8

4,0

35,1

23,0

16,6

27,0

22,7

5,0

13,1

11,0

12,5

57,0

42,0

30,0 C & L Su(cid:138)de

27,0 KPMG

22,7 KPMG

19,3 Coopers &

57,0

57,8

30,0 C & L Su(cid:138)de

27,0 KPMG

35,1 C & L + PW 22,7 KPMG

Lybrand

21,9

9,9

31,7

15,7

25,9

13,8

12,7

47,8

25,9 KPMG

21,9 Coopers &

57,6

31,7 C & L + PW 25,9 KPMG

Lybrand

World

18,0

12,0

30,0

17,0

20,0

17,0

16,0

38,0

20,0 KPMG

18,0 Coopers &

50,0

30,0 C & L + PW 20,0 KPMG

Lybrand

Source: IAB figures cited in form CO, p. 34.

2
6

.

2

.

1
9
9
9

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e
E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

L
5
0
/
4
7

Estimated percentage revenue share

Market structure before C & L-PW merger

Market structure after C & L-PW merger

ANNEX III

(%)

d
n
a
r
b
y
L
&
s
r
e
p
o
o
C

e
s
u
o
h
r
e
t
a

W

e
c
i
r
P

W
P
+
L
&
C

g
n
u
o
Y
&

t
s
n
r
E

G
M
P
K

n
e
s
r
e
d
n
A

r
u
h
t
r

A

e
h
c
u
o
T
e
t
t
i
o
l
e
D

3

t
s
e
g
g
i
b
f
o

e
r
a
h
s

r
e
g
r
e

m

-
e
r
P

e
r
a
h
s

t
e
k
r
a
m

t
s
r
i
F

e
r
a
h
s

t
e
k
r
a
m
d
n
o
c
e
S

e
r
a
h
s

t
e
k
r
a
m
d
r
i
h
T

3

t
s
e
g
g
i
b
f
o

e
r
a
h
s

r
e
g
r
e

m

-
t
s
o
P

t
e
k
r
a
m
e
r
a
h
s

t
s
r
i
F

e
r
a
h
s

t
e
k
r
a
m
d
n
o
c
e
S

e
r
a
h
s

t
e
k
r
a
m
d
r
i
h
T

Austria

10,0 10,6 20,6 23,1 31,6

8,9 15,8 70,5 31,6 KPMG

23,1 Ernst &
Young

15,8 Deloitte
Touche

75,3 31,6 KPMG

23,1 Ernst &
Young

20,6 C & L+PW

Belgium

17,6 11,1 28,7 26,4 19,5 12,1 13,2 63,5 26,4 Ernst &
Young

19,5 KPMG

17,6 Coopers &

Lybrand

74,6 28,7 C & L+PW 26,4 Ernst &
Young

19,5 KPMG

Denmark

17,9

8,6 26,5 13,8 29,3

8,5 21,9 69,1 29,3 KPMG

21,9 Deloitte
Touche

Finland

29,2

3,5 32,7 15,1 29,5 14,9

7,8 73,8 29,5 KPMG

29,2 Coopers &

Lybrand

Lybrand

15,1 Ernst &
Young

17,9 Coopers &

77,7 29,3 KPMG

26,5 C & L+PW 21,9 Deloitte
Touche

77,3 32,7 C & L+PW 29,5 KPMG

15,1 Ernst &
Young

France

14,3 11,2 25,5 13,3 34,5 15,7 11,0 64,5 34,5 KPMG

15,7 Arthur

14,3 Coopers &

75,7 34,5 KPMG

25,5 C & L+PW 15,7 Arthur

Germany

33,5

5,1 38,6 11,4 31,9

9,5

8,6 76,8 33,5 Coopers &

31,9 KPMG

Lybrand

11,4 Ernst &
Young

81,9 38,6 C & L+PW 31,9 KPMG

Andersen

Lybrand

Andersen

11,4 Ernst &
Young

Greece

18,9

8,1 27,0 15,7 17,2 27,3 12,8 63,4 27,3 Arthur

18,9 Coopers &

17,2 KPMG

71,5 27,3 Arthur

27,0 C & L+PW 17,2 KPMG

Andersen

Lybrand

Andersen

Iceland

Ireland

10,2

0,0

0,0 N/A ; 20 10,2 10,2

0,0

14,5 19,6 34,1 14,8 23,6 13,4 14,0 58,0 23,6 KPMG

19,6 Price

Italy

16,1 12,6 28,7 18,7 16,5 25,1 11,1 60,3 25,1 Arthur

Andersen

Waterhouse

18,7 Ernst &
Young

14,8 Ernst &
Young

72,5 34,1 C & L+PW 23,6 KPMG

16,5 KPMG

72,5 28,7 C & L+PW 25,1 Arthur

Andersen

14,8 Ernst &
Young

18,7 Ernst &
Young

L
5
0
/
4
8

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e
E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

2
6

.

2

.

1
9
9
9

Estimated percentage revenue share

Market structure before C & L-PW merger

Market structure after C & L-PW merger

(%)

d
n
a
r
b
y
L
&
s
r
e
p
o
o
C

e
s
u
o
h
r
e
t
a

W

e
c
i
r
P

W
P
+
L
&
C

g
n
u
o
Y
&

t
s
n
r
E

G
M
P
K

n
e
s
r
e
d
n
A

r
u
h
t
r

A

e
h
c
u
o
T
e
t
t
i
o
l
e
D

3

t
s
e
g
g
i
b
f
o

e
r
a
h
s

r
e
g
r
e

m

-
e
r
P

e
r
a
h
s

t
e
k
r
a
m

t
s
r
i
F

e
r
a
h
s

t
e
k
r
a
m
d
n
o
c
e
S

e
r
a
h
s

t
e
k
r
a
m
d
r
i
h
T

3

t
s
e
g
g
i
b
f
o

e
r
a
h
s

r
e
g
r
e

m

-
t
s
o
P

t
e
k
r
a
m
e
r
a
h
s

t
s
r
i
F

e
r
a
h
s

t
e
k
r
a
m
d
n
o
c
e
S

e
r
a
h
s

t
e
k
r
a
m
d
r
i
h
T

Liechtenstein : 10 N/A 0,0 N/A N/A N/A N/A 0,0

Luxembourg

19,0 11,0 30,0 15,0 13,0

8,0 23,0 57,0 23,0 Deloitte
Touche

19,0 Coopers &

Lybrand

15,0 Ernst &
Young

68,0 30,0 C & L+PW 23,0 Deloitte
Touche

15,0 Ernst &
Young

Netherlands

23,1

3,0 26,1 25,0 26,6

2,9 19,4 74,7 26,6 KPMG

25,0 Ernst &
Young

23,1 Coopers &

77,7 26,6 KPMG

Lybrand

26,1 C & L+PW 25,0 Ernst &
Young

Norway

20,6

6,9 27,5 23,6 16,1 17,0 15,8 61,2 23,6 Ernst &
Young

20,6 Coopers &

17,0 Arthur

Lybrand

Andersen

68,1 27,5 C & L+PW 23,6 Ernst &
Young

Portugal

17,7 14,8 32,5 26,3 13,0 22,1

6,1 66,1 26,3 Ernst &
Young

22,1 Arthur

17,7 Coopers &

Andersen

Lybrand

80,9 32,5 C & L+PW 26,3 Ernst &
Young

17,0 Arthur

Andersen

22,1 Arthur

Andersen

Spain

12,5 18,6 31,1 16,1 14,0 31,7

7,1 66,4 31,7 Arthur

Andersen

18,6 Price Wa-

terhouse

Sweden

30,0

4,0

4,0 23,0 27,0

5,0 11,0 80,0 30,0 C & L Su(cid:138)de

27,0 KPMG

United
Kingdom

Europe

19,3 15,8 35,1 16,6 22,7 13,1 12,5 58,6 22,7 KPMG

19,3 Coopers &

Lybrand

21,9

9,9 31,7 15,7 25,9 13,8 12,7 63,5 25,9 KPMG

21,9 Coopers &

Lybrand

World

18,0 12,0 30,0 17,0 20,0 17,0 16,0 55,0 20,0 KPMG

18,0 Coopers &

Lybrand

16,1 Ernst &
Young

23,0 Ernst &
Young

16,6 Ernst &
Young

15,7 Ernst &
Young

17,0 Ernst &
Young

78,9 31,7 Arthur

Andersen

31,1 C & L+PW 16,1 Ernst &
Young

80,0 30,0 C & L
Su(cid:138)de

27,0 KPMG

74,4 35,1 C & L+PW 22,7 KPMG

73,3 31,7 C & L+PW 25,9 KPMG

67,0 30,0 C & L+PW 20,0 KPMG

23,0 Ernst &
Young

16,6 Ernst &
Young

15,7 Ernst &
Young

17,0 Ernst &
Young

Source: IAB figures cited in form CO, p. 34.

2
6

.

2

.

1
9
9
9

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e
E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

L
5
0
/
4
9