Canadian Lawyer InHouse

JULY 2015 16 INHOUSE Q U I Z ANSWERS YOUR RANKING? ■ One correct: might be time to brush up ■ Two correct: not bad, but some further work needed ■ Three correct: very well done, but not perfect ■ Four correct: excellent 1 (F) Construction companies and trade associations should consider implementing a Competition Act compliance program. Compliance programs are educational tools designed to ensure that an organization's employees and managers understand their obligations pursuant to the Competition Act. A compliance program will: (a) reduce the risk of violations of the act; (b) reduce the fi nancial and reputational costs resulting from an investigation by the Bureau; (c) increase awareness of the Competition Act amongst employees, business associates, customers, and suppliers; (d) reduce the risk of potentially illegal conduct and exposure to civil, criminal, or penal liability; and (e) assist a company and its employees in their dealings with the Bureau, particularly if the company is seeking leniency. Compliance programs help organizations train their employees to spot potentially risky activity, and can be particularly useful for companies such as road-paving and construction companies that are involved in trade associations frequently involved in bidding and tendering situations, or operating in industries subject to increased Bureau scrutiny. 2 (D) Section 45 of the Competition Act, which prohibits conspiracies to control a market (price-fi xing), carries discretionary penalties of fi nes of up to $25 million or imprisonment for up to 14 years. Section 47 of the Competition Act, which prohibits "bid-rigging," can attract a fi ne of an unlimited amount, or imprisonment for up to 14 years. Companies found to have abused their dominant position in the marketplace can be penalized with administrative monetary penalties of up to $15,000,000. 3 (B) Larry and Gary are incorrect. By sharing their pricing information, Larry and Gary are violating s. 45 or s. 47 of the Competition Act. Regardless of whether Larry and Gary are the only two bidders on a job, their decision not to undercut one another's prices is anti-competitive behaviour. Notably, the Bureau does not need documentary proof of this behaviour to commence an investigation into Larry's or Gary's company — it can commence an investigation based solely on a belief that anti-competitive behaviour has occurred. Once the Bureau discovers that Larry and Gary are aware of sensitive pricing information that will allow the two companies to ensure that they maintain artifi cially high prices – to the detriment of consumers — either or both companies could be charged under the Competition Act. Larry, Gary, and any other participants from their companies also face fi nes and prison time for their participation in the conspiracy. 4 (C) In this scenario, Larry and Gary are both guilty of bid-rigging, and could face a prison sentence of up to 14 years. Notably, they also face fi nes of an unlimited amount. The fact that Larry withdrew his bid to help Gary's company amounts to a violation of the bid-rigging provision (s. 47) of the Competition Act. By withdrawing his bid, Larry is reducing competition for the subway-tunnelling project, to the detriment of the subway owner (and by implication, the taxpayer). Gary, in turn, has agreed to commit the same criminal act in the future. In the meantime, his company is the benefi ciary of the anti-competitive behaviour. At no time should companies consider any sort of bidding "strategy" to be acceptable behaviour. Examples of common but illegal bidding practices include bid suppression, complementary bidding, bid rotation, phantom bids, buy-back, and phantom auctions. A DAILY BLOG OF CANADIAN LEGAL NEWS LEGALFEEDS.CA FEEDS LEGAL POWERED BY V O T E D BEST NEWS BLOG CLAWBIES 2014

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