The Competition Bureau has cautioned businesses against involvement in illicit arrangements relating to public contracts, which can result in criminal charges, heavy fines, and long-term reputational damage.
Examples of such arrangements include bid‑rigging, price‑fixing, market allocation, supply restriction, wage-fixing, and no-poaching. The bureau noted that the risk of competitors inking illegal agreements rises during times of accelerated growth in public procurement opportunities.
Canadian organizations chasing the same openings could attempt to secure public contracts by coordinating bids, prices, or results with the uptick in the volume of public contracts seeking bids.
“Collusion in public contracts undermines fair competition and erodes public confidence in government contracting. Illegal agreements between competitors can increase the cost of public procurement by more than 30 percent, diverting public funds away from taxpayers and essential public services,” the Competition Bureau said in a media release.
Public procurement comprises about 15 percent of Canada’s GDP, and all levels of government in Canada invest hundreds of billions annually into goods, services, and infrastructure, the federal government indicated. The Competition Act imposes legal obligations on businesses bidding on federal, provincial, territorial, and municipal contracts.
These obligations safeguard the government’s investments; thus, breaching them through entrance into illegal agreements warrants financial penalties and potential jail time of up to 14 years. The bureau also warned colluding businesses that they could be named in class actions. Public procurement agencies may also debar businesses that engage in bid-rigging and prohibit them from bidding on projects in the future.
The Competition Bureau urged those who suspected companies or individuals of participating in illegal agreements to report such activity through the bureau’s Information Centre or its online complaint form. It also encouraged whistleblowers to disclose information on unethical business practices in federal contracting through its 1-844-365-1616 hotline, tip submission, or its Whistleblowing Initiative.
Those involved in illegal collusions may also receive immunity or leniency if they cooperate with bureau investigations.
“When businesses operate in a fair and competitive manner, it helps ensure that Canadians receive the highest value for their tax dollars, allowing governments to reduce costs while improving the quality of goods and services procured,” the Competition Bureau said. “Playing by the rules also ensures that small and medium sized businesses and new market entrants can compete on a level playing field, rather than being excluded by collusion among established suppliers.”