The British Venture Capital Association (BVCA) is asking the Office of Fair Trading to refer to the Monopolies and Mergers Commission (MMC) an agreement by the Big Six accountancy firms on limiting their liability.
Travers Smith Braithwaite corporate partner Margaret Chamberlain, a member of the BVCA's legal committee, has helped draw up the organisation's representations to the Office of Fair Trading.
She said the agreement – which has been applied by the Big Six since 1 November 1996 – meant that an individual venture capitalist was not able to negotiate some of the terms under which it appoints an accountant.
Chamberlain said: “The accountant will say 'I can't take that clause out – we have agreed with the other accountancy firms to include it'.”
The agreement sets a £25m cap on liability for any transaction, even where the value of the deal is greater, and sets lower limits for lower value deals.
When a venture capital company wants to sue its accountant, the agreement forces the company to sue any other party named by the accountant.
The Big Six accountants and the City law firms have long complained that they are often the only parties sued when a transaction goes wrong because they have unlimited liability. The agreement is an attempt to get the aggrieved party to sue management and other bodies.