The Competition Act and construction

Continued concerns have come up related to the construction industry and the Competition Act.

In Canada, the law relating to bid-rigging is divided between the criminal law relating to fraud and the more specialized field of competition law. Accordingly, depending upon the particular circumstances of a given case, a bid-rigging arrangement may constitute the offence of fraud under the Criminal Code, or the separate offence of bid-rigging under the Competition Act.

Most recent prosecutions have been under the Competition Act, rather than the code, therefore the Competition Act should first be considered. Canada’s competition laws date from 1889 — the year before the enactment of the Sherman Antitrust Act. However, for many years, prosecutions were few and convictions rare. The current regime has been in place since 1986, when the former Combines Investigation Act was extensively amended and became the Competition Act.

Since that revision, the act was amended in 1992, 1999, 2000 and 2002, in each case with a view towards facilitating prosecution, and also so as to address emerging issues such as deceptive telemarketing. The 2008 Conservative Party election campaign platform contained a number of commitments in relation to competition law, including the following of particular relevance here:

— An increase in the maximum penalties for cartels and bid-rigging to up to a $25-million fine and 14 years in prison, replacing the current maximum penalties of $10 million and five years.

— The introduction of a non-criminal track with a corresponding lower evidentiary threshold for offences such as price discrimination, promotional allowances and predatory pricing.

— The introduction of administrative monetary penalties (up to $10 million, and $15 million, for repeat offenders) for companies found to have breached the abuse of dominance of the Competition Act.

— Empowering the Competition Tribunal with the ability to order restitution to victims of deceptive marketing practices, including the ability to freeze assets and prevent the disposal of property to ensure that money remains available for restitution. It is not clear whether this provision would extend into the bid-rigging area.

These proposals were eventually carried forward in Bill C-10, which received Royal assent on March 12, 2009. This is based upon the law as revised by Bill C-10.

The Competition Act and the Competition Tribunal Act set out the legal and institutional framework for the competition law in Canada. The commissioner of competition is responsible for investigating alleged anti-competitive conduct and mergers, as well as misleading advertising and other deceptive marketing practices. The commissioner also heads the Competition Bureau, which carries out investigative and advocacy work. At the end of an investigation by the bureau, the commissioner decides whether to refer the matter to the Competition Tribunal, in the case of a non-criminal matter, or to the Attorney General of Canada in the case of a criminal matter. If the evidence is insufficient, the matter is discounted. Once a criminal matter has been referred to the attorney general, the director of public prosecutions has the independent discretion to determine whether it is in the public interest to prosecute before the courts.

In practice, contested proceedings before the courts and Competition Tribunal are rare. Most cases are resolved on a consensual basis, and there is a wide range of remedies available under the Competition Act depending on the nature and seriousness of the matter. There is also scope for filing lawsuits for the recovery of damages by private parties under the Competition Act involving criminal matters, as well as limited private enforcement before the Competition Tribunal in civil matters.

The granting of formal investigatory powers to the bureau or other independent government agency to conduct market studies is another subject of debate.

Stephen Bauld, Canada’s leading expert on government procurement, is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.