The regulator referred the consultancy groups following a public consultation on the supply of statutory audit services to large companies, which closed in September.
John Fingleton, chief executive of the Office of Fair Trading, said the market for large company audits lacks sufficient competition and does not work well for customers.
He added: "It is highly concentrated, largely supplied by four big firms, with clients rarely switching between auditors. There are also high barriers to entry for new and smaller competitors. These are not the indicators of a competitive market.
"Voluntary and industry-led efforts to increase competition and choice in this market have proved unsuccessful.
"Following extensive consultation, we have concluded that a reference to the Competition Commission is appropriate. We believe that such an inquiry will also complement the EU's legislative process."
Ahead of the referral, the Commission held a series of discussions with other audit service providers and their customers.
Despite concerns about related work continuing in the European Union, the OFT decided there was an urgent need for an inquiry now, for what could be a UK-specific problem.
David Herbinet, London managing partner of Mazars, said he agrees that an inquiry is needed, if only for the public interest.
He explained: "We need a much more open vibrant market. This would better serve the twenty-first century needs of shareholders and wider society. More competition would enhance audit quality and foster the growth agenda.
"It would bring much needed innovation in audit reporting, improve client service and lead to more distinctive service offerings. It is a basic economic principle that improved competition leads to a healthier market and a better deal for clients.
"It is now time for those resisting change to justify their position."
Herbinet said that London needs a thriving audit market that is protected against dominant players leaving the market unexpectedly.
He continued: "The problem however is a wider European and global one as well and so we look forward to Brussels bringing forward proposals to ensure a level playing field across the European Union and one with an increased number of quality players on the pitch with size no longer being taken as a proxy for quality"