Outlook: Regulators watch closely as six become five

The big six are to become the big five and in one fell swoop Arthur Andersen is toppled from pole position. If this is allowed through without regulatory obstruction, it cannot be long before Deloitte Touche at the bottom of the pile is picked off too and the five will become four. Coopers and Price Waterhouse were trying to make light of it all yesterday (no cost-cutting and no redundancies involved), but if nobody very much is complaining too much yet, it is hard to believe this can long remain the case.

One of accountancy's professional bodies, the Association of Chartered Certified Accountants, has already come out agin, as have some of the other big practices, while the constituents of the FTSE 100, half of whom will be audited by this new accounting behemoth once the merger goes through, are almost bound to kick up a fuss if they believe the marriage might lead to higher audit fees.

These, the two partners are swift to tell us, are under severe pressure and nowdays barely compensate for the risks of being sued for negligent work. Even so if the competition authorities in either Brussels or Washington are persuaded that the merger will limit the choice of audit partnership and drive up fees, they may be tempted to block the road.

In some respects all the affable Peter Smith at Coopers and his opposite number, Ian Brindle at PW, are doing here is aping their own clients. They even use some of the same jargon. Phrases like "global reach" and "leveraging the brand" are now so much part of the new "big is beautiful" global corporation that it is hard to fault the people who audit these enterprises for aspiring to the same thing. When all around you is going global, what choice do you have but to go global too? All the same, there is a distinctly defensive feel about this merger.

Furthermore, there is no evidence that expanding the audit base is going to lead clients to buy the other value added services the big practices offer - consultancy, tax planning, legal services and the like - in any greater quantity than they already do. Arthur Andersen's spectacular success in consultancy is largely unrelated to its captive audit base. Messrs Smith and Brindle shouldn't have too much difficulty selling this alliance to their own partners; whether clients too can be persuaded is rather more doubtful.