On July 19 2011 Les Entreprises Promécanic Ltée pleaded guilty to three counts of bid rigging before the Superior Court of Quebec and was fined C$425,000. The fine ranks among the largest ever imposed under the bid-rigging offence of the Competition Act.
The bid-rigging offence is provided under Section 47 of the Competition Act. In response to a call for bids or tenders, it prohibits bidders from agreeing not to submit a bid or to submit a bid that is the product of an agreement, when such an agreement is unbeknown to the person calling for the bids. It is an indictable offence for which the sentence is a fine (the quantum being to the court's discretion), imprisonment for up to 14 years or both. Collusion in the bidding process, the decision not to submit bids, bid rotation and bid sharing among bidders rank among the most widespread forms of bid rigging.
Promécanic was convicted for taking part in an agreement that aimed to rig bids for private sector contracts to supply and install ventilation or air conditioning systems in residential high-rises in the Montreal area. In 2005 a former employee of one of the companies involved in the case raised a red flag, alerting the Competition Bureau. The bureau then investigated for over five years before laying as many as 27 criminal charges. The bureau's investigation established that criminal activity was committed in the process of five calls for bids between 2003 and 2005 regarding contracts valued at approximately C$8 million.
In addition to the fine, Promécanic's estimator, Joël Perreault, was barred for 10 years from carrying out any other acts contrary to Section 47, pursuant to the court's prohibition order. Other charges against Perreault were dropped in exchange for his cooperation with the bureau's prosecution of the other defendants. In 2006 Perreault was accused of obstruction and destruction of documents following a visit by the bureau's inspectors, who were carrying out searches of Promécanic's premises.
The bureau closely monitors companies that could be tempted to engage in bid rigging. The bid and tender process, which is common in construction contracts as well as contracts from government offices, is intended to provide the lowest prices to the Canadian public. In fact, recent studies found that when companies engage in bid rigging, it frequently results in a 20% price increase for the affected products and services.
The imposed C$425,000 fine comes in the wake of the forceful approach put forward by Commissioner of Competition Melanie Aitken, whereby the bureau intends to enforce vigorously the Competition Act and exert pressure on offenders that engage in anti-competitive activities, including bid rigging. It is one of the bureau's top priorities, reflected by the severity of the penalty imposed on Promécanic.
For further information on this topic please contact Denis Gascon or Laurence Smith-Lauzon at Norton Rose OR LLP by telephone (+1 514 847 4747), fax (+514 286 5474) or email ([email protected] or [email protected]).