International Competition Network Addresses Bid-Rigging in Government Procurement

In October 2017, Canada’s Commissioner of Competition John Pecman (Commissioner) joined competition law enforcement authorities from around the world in Ottawa for the International Competition Network’s (ICN) 14th annual Cartel Workshop, which focused on “combating cartels in public procurement”.

The Cartel Workshop involved 27 sessions addressing bid-rigging issues such as detection in public versus private procurement, screening public procurement data to detect bid-rigging, working with informants in and out of government, cooperation with other domestic and international law enforcement agencies, actions for damages and best practices for fostering compliance with bid-rigging laws. Some sessions went beyond bid-rigging, for example focusing on companies’ use of algorithms for pricing decisions, the use of indirect evidence in cartel cases, technology of assistance to cartel investigations, and sanctions generally. Certain materials presented at the workshop may become available, as has been done in previous years, on the ICN website.

In his opening remarks, the Commissioner noted that for its 122 jurisdictions “the ICN has become a key platform for sharing experiences and best practices, and for advancing global convergence in competition policy”. Referencing the Government of Canada’s commitment to spending C$186-billion over the next decade on infrastructure, the Commissioner stated that “bid-rigging on public contracts can lower project quality and increase prices paid by tax payers by as much as 30 per cent… [and] has a negative impact on the level of innovation and growth in the economy over the long-term”.

Pointing to the launch of a Contracting Fraud Tipline and the Competition Bureau’s outreach efforts with federal, provincial and municipal public procurement officials, Commissioner Pecman stressed the importance of using the “latest tools to detect and prevent bid-rigging”, such as “tender design and data screening algorithms”, and the need for all levels of government to work together to protect the integrity of the public procurement process.

Consistent with the Competition Bureau’s focus on public procurement, on September 25, 2017, the Canadian government launched a public consultation on possible modifications to its “Integrity Regime”, which may disqualify parties from bidding on federal government contracts where they have been found to have contravened the criminal provisions of the Competition Act or certain provisions of the Criminal Code. The consultation seeks answers to targeted questions aimed at making the Integrity Regime more effective, such as:

  • Should offences beyond the Competition Act and Criminal Code be included (e.g., those under provincial laws)?
  • When should a party be suspended from bidding on government contracts (e.g., before a formal charge or conviction, or only after)?
  • How long should such suspension last?

The consultation also considers the potential adoption of deferred prosecution agreements (DPAs). Through such arguments, the prosecution of a company may be suspended and amnesty granted if the company meets certain conditions, which range from admissions of guilt and payments of reparation, to reform of the company’s policies, to assistance with the government’s investigation and prosecution of other parties. Regarding the potential for DPAs, the consultation asks more general questions, for example as to the offences that should benefit from a DPA, the basic terms of any DPA and the forms of remediation that should be included. The public consultation is open until November 17, 2017.

If you have any questions or comments regarding these developments, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition & Antitrust or Procurement groups.

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