The Competition Commission of Pakistan (CCP) has recently issued a strong directive discouraging the use of the term “Big Four” in commercial agreements for appointing firms for assurance and financial services. This move comes as part of the CCP’s ongoing efforts to promote fair and open competition in the financial services sector and ensure that no single group of firms receives undue preference.
The term Big Four typically refers to the four major firms offering a wide range of professional services, including assurance, consulting, financial advisory, risk management, and tax services, both globally and within Pakistan. These firms are often favored for high-profile financial assignments due to their global recognition, but the CCP is now questioning this longstanding practice.
The Commission made this observation while reviewing applications from two companies: MNT Halan Pak B.V. and Advans S.A. SICAR. Both applicants sought exemptions from certain restrictive clauses in their agreements, which included the stipulation that financial or assurance services must be provided by one of the Big Four firms. Upon reviewing these applications, the CCP clarified that the selection process for these services should not be restricted to just these four firms. Such limitations, it argued, undermine open competition, which is a violation of Pakistan’s Competition Law.
According to the CCP, any condition in a contract that imposes an unnecessary limitation on service providers impedes the principle of fair competition. The Commission, therefore, issued directives in both cases, instructing the involved parties to ensure their agreements do not restrict the selection of service providers to the Big Four. This directive reflects the CCP’s commitment to preventing practices that could distort the competitive landscape in Pakistan’s financial services market.
The CCP further emphasized that Pakistan has a diverse and competitive market for professional services, which should not be overshadowed by the dominance of a select group of firms. The Institute of Chartered Accountants of Pakistan (ICAP), for example, maintains a list of 130 chartered accounting firms that have received satisfactory Quality Control Review (QCR) ratings. These firms are fully capable of providing a broad spectrum of financial services, yet they often do not receive the same level of visibility as the Big Four due to the restrictive nature of certain agreements.
Additionally, the State Bank of Pakistan (SBP) maintains a panel of 46 auditors for banking companies, categorized into three groups—A, B, and C—under Section 35(1) of the Banking Companies Ordinance, 1962. Meanwhile, the Securities and Exchange Commission of Pakistan (SECP) has its own approved list of auditors for the audit of insurance and takaful entities under Section 48 of the Insurance Ordinance. None of these regulatory bodies have mandated or implied the exclusive use of the Big Four firms, further underscoring the CCP’s stance that limiting selection to these firms is unwarranted and detrimental to competition.
The CCP’s directive aligns with the principles of the Competition Act, 2010, which seeks to prevent anti-competitive practices and ensure that all firms, regardless of size or global stature, have a fair opportunity to compete in the marketplace. By discouraging the use of the term Big Four in commercial agreements, the CCP aims to foster a more inclusive and competitive environment for financial and assurance services in Pakistan.
In a broader context, this decision is part of a growing global conversation around the dominance of the Big Four firms in the professional services industry. Critics argue that the concentration of financial services in the hands of a few large firms can stifle competition and innovation, particularly in emerging markets like Pakistan, where local firms often struggle to compete with their larger, multinational counterparts. The CCP’s directive is a clear indication that Pakistan’s regulatory authorities are aware of these concerns and are taking proactive steps to address them.
Through its rulings, the CCP has once again emphasized the importance of transparent and open selection processes in all commercial and economic activities across the country. This move is expected to level the playing field for the many qualified and capable financial firms operating in Pakistan, enabling them to compete more fairly for lucrative contracts that have historically gone to the Big Four.
In conclusion, the CCP’s decision to discourage the use of the Big Four in commercial agreements is a significant step toward promoting fair competition in Pakistan’s financial services sector. It underscores the need for open and transparent selection processes and sends a strong message to businesses and regulators alike that restrictive practices will not be tolerated. By fostering a more competitive environment, the CCP aims to encourage innovation, efficiency, and better services for all stakeholders in the market.