Cartels and Bid-Rigging

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Table of Contents

Cartels

A cartel is formed when businesses agree to act together instead of competing with each other, all the while maintaining the illusion of competition.

A cartel is a group of independent businesses whose concerted goal is to lessen or prevent competition.

The most common forms of cartel conduct are:

  • Rigging bids: two or more individuals conspire to manipulate a tendering process;
  • Fixing prices: two or more competitors agree on pricing for the supply of goods or services;
  • Market allocation: two or more competitors agree to allocate sales, territories, customers or markets amongst themselves;
  • Output restriction: two or more competitors agree to control or limit the quantity of goods or services produced or supplied.

Cartels are illegal because they lead to higher prices, decreased product choice and less innovation. They syphon off billions of dollars from the global economy each year.

For more information on cartels and cartel activity, please visit the Competition Bureau’s Investigating Cartels web site.

Bid-rigging

Bid rigging occurs when two or more persons agree that, in response to a call for bids or tenders, one or more of them will:

  • not submit a bid;
  • withdraw a bid; or
  • submit a bid arrived at by agreement.

The offence of bid rigging is committed only if the person requesting the bids or tenders is not informed beforehand about the agreement made between the parties.

Bid rigging is a serious crime that eliminates competition among suppliers, increases costs, and harms the ability to hold fair and open competitions. Whether this occurs on government projects or in the private sector, these increased costs are ultimately passed on to the public.

Bid rigging typically involves competitors agreeing to artificially increase the prices of goods and/or services offered in bids to potential customers.

As bid-rigging is a criminal offence under Canada’s Competition Act, firms and individuals convicted of bid rigging face fines at the discretion of the court or imprisonment for up to 14 years, or both.

For further details on how to detect and prevent bid rigging, refer to the presentation on Bid rigging: detecting, preventing and reporting — Toolbox for procurement.

Competition Bureau

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

If you are an employee of a company which you believe may be involved in bid-rigging or other cartel activity, you can report your concerns to the Competition Bureau.

The whistleblowing provisions of the Competition Act will protect your identity and guard against retaliation by your employer. Any information provided will be kept strictly confidential.

If you are involved in a cartel and wish to terminate the illegal activity, you may be eligible for full immunity from prosecution if you come forward to disclose the activity and cooperate under the Bureau’s Immunity Program.

Reporting bid-rigging and cartel activity

The Competition Bureau (CB), Public Services and Procurement Canada (PSPC), and the Royal Canadian Mounted Police (RCMP) established the Federal Contracting Fraud Tip Line. The information gathered through the tip line or online form, will be shared amongst CB, the RCMP and PSPC.

To report misconduct, including collusion or bid-rigging, the tip line and online form can be found at the following web site: https://www.ic.gc.ca/eic/site/094.nsf/frm-eng/MBED-AJL22H.