1. BID-RIGGING AWARENESS AND PREVENTION
Pierre-Yves Guay and Jean-Sébastien Rivard
Cartels and Deceptive Marketing Practices Branch
Competition Bureau
Building a prosperous and innovative Canada

2. Competition Bureau
Headed by the Commissioner of Competition, the Bureau is an independent law enforcement agency responsible for the administration and enforcement of the Competition Act (the Act), a federal law that governs most business conduct in Canada
The Bureau is also responsible for the Textile Labeling Act, the Consumer Packaging and Labeling Act (except as it relates to food) and the Precious Metals Marking Act
The Bureau’s role is to help the Canadian marketplace be more competitive and innovative for the benefit of businesses and consumers through:
Competition enforcement
Competition promotion

3. Competition Bureau (continued)
Headquarters located in Gatineau, Quebec
Regional offices in Toronto, Montreal and Vancouver
Approximately 370 employees
Works closely with
Competition Law Section of the Public Prosecution Service of Canada (PPSC)
Competition Bureau Legal Services (Department of Justice)

4. Competition Bureau: Organizational Structure

5. Cartels and Deceptive Marketing Practices Branch
Made up of the Cartels Directorate and the Deceptive Marketing Practices Directorate
Cartels Directorate: investigates hard core cartels, including conspiracies- agreements or arrangements among competitors and potential competitors to fix prices, rig bids, allocate markets or restrict supply
Deceptive Marketing Practices Directorate: investigates false or misleading representations and deceptive marketing practices
Responsible for all investigations related to criminal provisions of the Act
The Deceptive Marketing Practices Directorate is also responsible for certain civilly reviewable matters set out in Part VII.1 of the Act.

6. Criminal Enforcement Tools - Statutory
Warrant for entry of premises (search warrant)
s. 15 & s. 16 of the Competition Act
s of the Criminal Code
Order for oral examination, production or written return
s. 11 of the Competition Act
s. 487 of the Criminal Code
Interception of electronic communications for certain offences under the Competition Act (wiretaps)
s.183 of the Criminal Code
Mutual Legal Assistance Treaties

7. Cartel Offences
The Competition Bureau investigates cartels under the following criminal provisions
Provision
Title
s. 45
Conspiracy
s. 46
Foreign Directive
s. 47
Bid-rigging
s. 48
Conspiracy relating to professional sport
s. 49
Agreements or arrangements of federal financial institutions

8. Bid-Rigging Offence: s. 47
There is a call for tenders
Two or more competitors submit bids arrived at
by agreement, or
One or more competitors agree:
(i) to not submit a bid, or
(ii) to withdraw their bid
Person calling for tenders is not informed of the agreement

9. Bid-Rigging Penalties
No limit on fines
Jail term up to 14 years for individuals
Victims have a statutory right to sue perpetrators to recover damages caused by bid-rigging (s. 36)
Criminal record will be registered with the Canadian Police Information Centre (CPIC)

10. All Industries are at Risk

11. Some Industries are More Susceptible
Be especially vigilant when tender involves:
Similar products
Simple products or services
Goods/services which have not seen significant technological advances/ changes
Products with few or no close substitutes
A small number of suppliers or customers
Supplier base with few new entrants
An active trade association

12. Common Forms of Bid-Rigging
Cover bidding – fake bidding
Bid suppression – withholding bids
Bid rotation – rotating agreed best bid
Market division – carving up the market
More than one of these techniques may be used

13. Warning Signs Involving Bid Submissions and Outcomes
Competitors’ bids are received together
Identical irregularities in bids
Suppliers meet before they submit tenders and you are not present
Suppliers that would normally tender fail to do so
Same supplier is often the successful bidder
Winning bidder does not accept the contract
Winning bidder subcontracts work to unsuccessful bidders
Pattern suggesting rotation of successful bids among several suppliers

14. Warning Signs Involving Pricing
Bids from local companies involve similar transportation costs as non-local bidders
Identical bid amounts
Large difference between price of winning bid and other bids
Significant change from past price levels occurs after bid from new or infrequent supplier
Range of quoted prices has moved suddenly, or existing discount arrangements have changed suddenly
Only one bidder contacts consultants/wholesalers for necessary pricing information

15. Warning Signs from Suppliers’ Statements
Use of the same terminology when explaining price increases
References to “industry suggested prices” or “industry price schedules”
Refusal to sell to you or in your area because of an agreement
Knowledge of competitor’s confidential bid

16. Library and Archives Canada (LAC)
In May 2014, the Bureau laid charges against one company and six individuals in relation to a bid-rigging conspiracy for federal government contracts for the supply of IT services to Library and Archives Canada (LAC).
Three of the individuals allegedly involved in the conspiracy were employed by LAC at the time, and have been charged under subsection 80(1) of the Financial Administration Act for allegedly making opportunity for another person to defraud the government.
In May 2015, one of the individuals charged under the Competition Act pleaded guilty to bid-rigging and received am 18-month conditional sentence, with the first six months to be served under house arrest. This individual was also fined $23,000 and ordered to perform 60 hours of community service.

17. Library and Archives Canada (continued)
In August 2016, another individual charged under the Competition Act pleaded guilty and received a similar sentence. Her plea agreement also requires her to participate in two public presentations alongside Competition Bureau staff to raise awareness about compliance with the Competition Act.
December 2016, one of the LAC employees pleaded guilty under the FAA for her involvement in the conspiracy. She received a criminal record with 15 months probation and 100 hours of community service.
At this time, the remaining accused in this matter will stand trial.

18. Case Example: Bid Rigging in the Construction Industry
In February 2011, the Québec provincial police force, the Sureté du Québec, created a Permanent Anti-Corruption Unit (UPAC)
In June 2012, following a joint investigation by UPAC and the Bureau, a total of 77 charges were laid against nine companies and 11 individuals in the construction industry in connection with a collusion scheme in the Saint-Jean-sur-Richelieu region in Montreal
These charges included 20 counts of bid-rigging against nine companies and 24 counts of bid-rigging against six individuals

19. Preventing Bid-Rigging
Protect procurement integrity in key areas:
Establishing bidding pool
Drafting tender specifications
Awarding contracts
Training and auditing
Disclosure of communications

20. Prevention: Establishing a Bidding Pool
Maximize the pool of potential bidders
Know your suppliers and their market prices
Know prices in other departments
Avoid obligatory bids
Keep bids confidential – do not disclose specifics of the pool

21. Prevention: Drafting Tender Specifications
Require disclosure regarding potential subcontractors and their pricing
Allow for flexibility in tender specifications
Avoid preferential treatment for a certain class of suppliers

22. Prevention: Awarding Contracts
Avoid splitting contracts between suppliers with identical bids
Ask questions if prices or bids don’t make sense

23. Prevention: Training and Auditing
Ensure regular staff training on bid-rigging avoidance
Start with Bureau’s online bid-rigging presentation
Review tender history/results periodically, especially in susceptible industries
Conduct interviews with
Vendors who no longer offer supply
Unsuccessful vendors

24. Prevention: Disclosure of Communications
Use a “Certificate of Independent Bid Determination”
Certificate requires disclosure of communications between bidders
Certificate available online on the Competition Bureau’s website
Establish a complaint mechanism for suppliers to convey competition concerns

25. Certificate of Independent Bid Determination (Excerpt)

26. If You Suspect Bid-Rigging
Thoroughly record details of all relevant behaviour
Do not discuss with suspected participants
Decide whether or not to continue with the tender
Contact the Competition Bureau

27. Conclusion
Bid-rigging and other anti-competitive practices cause serious economic harm
Awareness aids detection
Reporting and prosecution deter criminal activity
Working smart and together, we can help maintain a competitive marketplace, keeping costs down and quality and innovation high

28. How to Contact the Competition Bureau
Website
Fax
Telephone
Toll free:
TDD service: