Evaluation of the Risks of Collective Dominance in the Audit Industry in France

32 Pages Posted: 6 Jun 2011

See all articles by Olivier Billard

Olivier Billard


Marc Ivaldi

Toulouse School of Economics; Centre for Economic Policy Research (CEPR)

Sebastien Mitraille

Toulouse Business School

Date Written: June 2011


The financial crisis drew attention to the crucial role of transparency and the independence of financial certification intermediaries, in particular, statutory auditors. Now any anticompetitive practice involving coordinated increases in prices or concomitant changes in quality that impacts financial information affects the effectiveness of this intermediation. It is therefore not surprising that the competitive analysis of the audit market is a critical factor in regulating financial systems, all the more so as this market is marked by various barriers to entry, such as the incompatibility of certification tasks with the preparation of financial statements or consulting, the expertise on (and the ability to apply) international standards for the presentation of financial information, the need to attract top young graduates, the prohibition of advertising, or the two-sided nature of this market where the quality of financial information results from the interaction between the reputation of auditors and audited firms. Against this backdrop, we propose a legal and economic study of the risks of collective dominance in the statutory audit market in France using the criteria set by Airtours case and, in particular, by analyzing how regulatory obligations incumbent on statutory auditors may favour the appearance of tacit collusion. Our analysis suggests that nothing prevents collective dominance of the auditors of the Big Four group in France to exist, which is potentially detrimental to the economy as a whole as the audit industry may fail to provide the optimal level of financial information.

Keywords: Airtours criteria, audit industry, collective dominance

JEL Classification: D43, M42

Suggested Citation

Billard, Olivier and Ivaldi, Marc and Mitraille, Sebastien, Evaluation of the Risks of Collective Dominance in the Audit Industry in France (June 2011). Available at SSRN: https://ssrn.com/abstract=1857366

Marc Ivaldi

Toulouse School of Economics ( email )

Manufacture des Tabacs
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Toulouse Cedex, F-31000
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Centre for Economic Policy Research (CEPR)

United Kingdom

Sebastien Mitraille

Toulouse Business School ( email )

+33 (0)561294844 (Phone)
+33 (0)561294994 (Fax)

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