In a blow to the Big Four accounting firms, the United Kingdom's Office of Fair Trading rebuffed the firms' claim that a litigation cap would boost competition, the Financial Times reported on its website.
The firms had campaigned to limit their liability but the U.K. office said a cap would be "competitively neutral overall,” the FT reported.
The firms were disappointed earlier this month when the office delayed action on their attempt to cap their liability when a company implodes on their watch.
The Big Four accounting firms Deloitte Touche Tohmatsu, Ernst & Young LLP, KPMG LLP and Pricewaterhouse Coopers LLP, argued that one or more of them could be destroyed by litigation, the Wall Street Journal reported.
U.K. accounting firms have been trying for nearly a decade to get liability protection and accounting firms across the European Union had been closely watching the U.K.'s action hoping it would begin a trend across Europe.
The meltdown of companies such as Enron in the U.S. and Parmalat SpA in Italy have caused accounting firms to seek protection against rising litigation risks and the difficulty and cost of insuring against such potential damage claims, the Journal reported earlier this month.