OUR SERVICES
We practice federal competition law, have provided Canadian competition law advice to clients across Canada and internationally and provide a full range of competition law and foreign investment law services including in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act.
Our bid-rigging law services include:
- Advice on the application of the bid rigging provisions of the Competition Act.
- Reviewing competitive bid and tender documents for compliance.
- Advice in relation to bid consortiums, joint ventures and joint bidding.
- Advice on the Competition Bureau’s immunity and leniency programs.
CANADIAN BID-RIGGING LAW
Overview
Unlike some jurisdictions, Canada has a standalone bid-rigging provision under section 47 of the Competition Act (the “Act”) (in some jurisdictions, bid-rigging falls under general cartel offences).
Section 47 of the Act sets out three distinct criminal bid-rigging offences, making it a criminal offence to: (i) agree to not submit a bid or tender, (ii) agree to withdraw a bid or tender already submitted (which was recently added to the Act as a result of March, 2009 amendments) or (iii) submit a bid or tender that is arrived at by agreement.
In Canada, bid-rigging is ”per se” illegal, in that no anti-competitive effects on a relevant market (or markets) need to be established in order to make out an offence. However, all of the elements need to be established on the criminal standard (i.e., beyond a reasonable doubt).
Elements
In order to establish a bid rigging offence, all of the following elements must be established: (i) an agreement or arrangement between two or more persons (or bidders or tenderers as the case may be), (ii) to not submit a bid or tender, withdraw a bid or tender already made, or submit bids or tenders arrived at by agreement, (iii) intent, (iv) a call or request for bids or tenders and (v) the agreement or arrangement is not made known to the person calling for bids or tenders at or before the submission or withdrawal of a bid or tender by any party to the agreement.
Agreement or Arrangement
The first necessary element to establish bid-rigging is the existence of an agreement or arrangement (to not submit a bid, withdraw a bid already made or submit a bid arrived at by agreement). It has been held, as under the conspiracy provisions of the Act, that an agreement is an essential element to establish a bid-rigging offence under section 47. Also as under the criminal conspiracy provisions, Canadian courts have articulated this element as requiring a “concensus of minds” or a “mutual understanding” between the parties to an agreement.
It has been held, however, that mere consultations between parties bidding in relation to pricing, where there has been no agreement or arrangement between the parties and their respective bids are not communicated to the other before tenders are submitted, does not contravene section 47. Of course, as under the Act’s conspiracy provisions, discussions or interaction with co-tenderers, where such interaction is not part of a bid consortium or other legitimate joint bidding arrangement, may well raise signficant issues and risk for the parties.
As with criminal conspiracies, a bid-rigging agreement may also be inferred from circumstantial evidence (e.g., the submission of identical bids following a meeting of bidders).
Intent
The second necessary element to establish bid-rigging is intent. In this regard, it must be established that an accused intentionally entered into an agreement or arrangement with one or more persons (or bidders as the case may be) to not submit a bid, withdraw a bid already made or submit a bid arrived at by agreement. It is worth noting, however, that while it must be established that an accused intended to engage in conduct proscribed under section 47, motive is irrelevant to establish an offence.
Call or Request for Bids or Tenders
To establish a bid-rigging offence, it must also be established that a bid or tender is made “in response to a call or request for bids or tenders”. It has been held that the requirement that there be a call or request for tenders will not be met where mere price quotations are submitted where there is “no specific direction or call” for bids or tenders (e.g., where price quotations by subcontractors are submitted to a general contractor, where the call for tenders or bids has been made to general contractors and not to the subcontractors).
Agreement Not Made Known to Person Calling for Bids or Tenders
Finally, to establish a bid-rigging offence, it must be established that an agreement or arrangement has not been made known to the person calling for bids or tenders at or before the submission or withdrawal of a bid or tender by any party to the agreement. In this regard, the Act in essence provides a defense for parties that are engaged in joint bidding projects, such as bidding consortia or other types of joint ventures that may involve the submission of joint bids.
The time when a bid or tender is made is critical to ensuring that this requirement is met, which has been held to be when the contents of a tender are communicated to the party calling for tenders (i.e., when a tender is opened). It is also critical that communication of any joint tendering be expressly made, as merely inferring the submission of joint bids (e.g., by the fact that bids are identical) will be insufficient.
Exceptions
The only actual bid-rigging exception is for agreements between affiliates (i.e., where an agreement or arrangement is entered into only between affiliates). As discussed above, however, a bid-rigging offence will also not be established where parties (or bidders) expressly communicate an agreement to a party calling for bids or tenders at or before the time when a bid is submitted or withdrawn. Where this is effectively achieved, the elements necessary to establish a bid-rigging offence cannot be made out.
Penalties
The penalties for contravention of the bid-rigging provisions can be severe and include unlimited fines (i.e., fines in the discretion of the court) and/or imprisonment for up to 14 years.
CANADIAN BID RIGGING LINKS & RESOURCES
Bid Rigging – Awareness and Prevention (Multi-media)
CANADIAN COMPETITION LAW LINKS
For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.
CONTACT US
We provide Canadian competition law and consulting services to Canadian and international clients. For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558. Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.