Brussels, 27/08/2002 (Agence Europe) - The European Commission has approved the merger between the German entities of the American consulting firm Ernst & Young, most of Andersen Germany's business and the German law firm Menold & Aulinger. Notified on 23 July last, the operation will not create a single or collective dominant position in Germany, the Commission concluded. The Commission examined the effects of the merger on the specific markets of audit and accounting services for large quoted companies, which traditionally use the services of the Big Five, namely Ernst & Young, Andersen, PriceWaterCoopers, KPMG and Deloitte & Touche. The pooling of the activities of Ernst & Young and Andersen will create a group in third position, well behind the leaders KPMG and PWC, and thus not creating a single dominant position. The Commission also reviewed the extent to which the reduction of the big auditing firms to four after the merger might pose problems in terms of creating or strengthening a collective dominant position. It concluded that there were no grounds for such concerns since the structure of the German market does not lend itself to concerted agreements between auditing firms. The merger should be seen in the context of the break-up of Andersen Worldwide, which was forced to restructure its activities after the scandal caused by the bankruptcy of Enron, whose accounts it audited. The takeover of Andersen UK by Deloitte & Touche has already been approved by the Commission (see EUROPE of 3 July, p. 12) whereas the merger between Andersen France and Ernst & Young is still under review.