Biggest Accounting Firm Merger Unravels

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A plan to create the world's biggest accounting firm was abandoned yesterday, with the companies backing away from regulatory thickets growing on three continents.

KPMG Peat Marwick LLP and Ernst & Young LLP yesterday agreed to cancel their merger talks, releasing statements calling the effort impractical in light of international regulations. The partnership would have created a company with $16.6 billion in revenue.

The merger was under investigation by antitrust regulators in the European Union, Australia, Switzerland, Canada, Japan and the United States, all of which had different requirements and rules.

"The regulatory thing was turning into a complete nightmare," an Ernst & Young partner told Bloomberg News. "When you added it all up, it was just going to take a lot of time, a lot of money, and a lot of blood, sweat and tears."

In a written statement, the companies said the decision was mutual. Corporate cultural differences, in addition to the regulatory problems, led to the decision.

"The regulatory process . . . would have taken many months, incurring considerable costs and potentially considerable disruption to client service," the companies said. They also raised the possibility that half a dozen antitrust investigations could lead to half a dozen different outcomes by regulators.

Cross-border regulation is becoming more common as economies become interdependent and corporations battle for a share in the international marketplace. About 30 percent of U.S. Federal Trade Commission antitrust investigations involve foreign companies. …