On February 17, 2012, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in a case relating to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making the announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations and have gone back about a century, have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, road surfacing contractors, chain link fence contractors, among many others.
There have also been a number of recent bid-rigging cases in Canada involving construction and construction supply related companies.
See for example: Guilty Plea and $425,000 Fine for Bid-rigging in Montreal, Charges Laid in Residential Construction Bid-rigging Scheme in Montreal, Competition Bureau Exposes Sewer Services Cartel in Quebec, Competition Bureau Obtains Court Order Against the Saskatchewan Roofing Contractors Association.
This is the fourth in a series of posts on Canadian bid-rigging law, which will conclude with practical steps for companies to take to reduce potential risk in light of historical risk and current heightened enforcement.
For Parts 1, 2 and 3 see: here, here and here.
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Bid-rigging Exceptions
Like section 45 of the Competition Act (criminal conspiracy offences), an affiliates exception is also available under section 47 (bid-rigging) where an agreement or arrangement is entered into or a submission is arrived at only by affiliated companies.
The affiliates exception for bid-rigging is also, like the affiliates exception under section 45, a relatively narrow bright-line exception that only applies to companies that are “affiliates” as defined in the Competition Act.
Having said that, an agreement will also not contravene section 47 where it is disclosed to the person calling for bids or tenders at or before the submission or withdrawal of a bid by any party to the agreement.
In essence, the Act provides an exception for parties engaged in joint bidding projects (i.e., bid consortia).
The time when a bid or tender is made, however, is critical to ensuring that this requirement is met, which has been held to be when the contents of a bid or tender are communicated to the party calling for tenders (i.e., when a tender is opened).
Communication of any joint tender arrangement must also be expressly made. Merely inferring the submission of joint bids, for example by the mere fact that bids are identical, has been held to be insufficient.
Penalties
Parties contravening the bid-rigging provisions of the Act are liable to a fine in the discretion of the court, imprisonment for up to 14 years, or both.
It is also common for the Bureau to seek prohibition orders in bid-rigging cases to prohibit the continuation of an offence.
Private parties that have suffered loss or damage as a result of a breach of the criminal provisions of the Act, including section 47, may also commence private damages actions (or class actions).
CANADIAN BID-RIGGING LINKS & RESOURCES
Legislation
Competition Bureau
Certificate of Independent Bid Determination
Pamphlets
Bulletins
Immunity Program under the Competition Act
Multi-media Tools
Bid-Rigging – Awareness and Prevention
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