Co-operation between anti-corruption and competition authorities

Joint meeting of the OECD Working Group on Bribery and the OECD Competition Committee

Paris, France

June 14, 2016

Presented by John Pecman, Commissioner of Competition


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Overview

Canada’s Competition Bureau has observed a close relationship between cartel conduct and corruption, particularly with respect to bid‑rigging in public procurement.

Given this relationship, the Bureau has, in recent years, taken steps to maintain and improve its relationships with police forces and procurement authorities in Canada in order to complement each organization’s efforts to promote competition and combat corruption.

Cartel conduct under the Competition Act

  • In Canada, the Competition Bureau is responsible for detecting, investigating and deterring cartel conduct
    • Conspiracies (s. 45) include agreements between competitors or potential competitors to fix prices; allocate sales, territories, customers or markets; or control production or supply of a product
    • Bid‑rigging (s. 47) occurs when there is a call for bids or tenders and two or more bidders submit bids arrived at by agreement, or agree that one or more of them will not submit a bid, or will withdraw a bid (without informing the person calling for tenders)
  • Penalties for conspiracy include a term of imprisonment not exceeding 14 years and/or a fine of up to $25,000,000; penalties for bid‑rigging include a term of imprisonment not exceeding 14 years and/or a fine in the discretion of the court
  • Corruption offences are investigated by other law enforcement agencies

Division of responsibility

  • In Canada, federal and provincial governments share jurisdiction over criminal prosecutions
  • The Competition Bureau is an investigative agency only ‑ criminal Competition Act offences are referred for prosecution to the independent federal body responsible for criminal prosecutions: the Public Prosecution Service of Canada (PPSC)
  • When charges are laid under both the Competition Act and under the Criminal Code or other statutes, prosecutions can be structured in different ways
    • Example: Bid‑rigging for IT contracts at a federal government department – charges under the Competition Act and Financial Administration Act laid and prosecuted by PPSC
    • Example: Bid‑rigging for Municipal infrastructure contracts in Quebec – charges under the Competition Act and Criminal Code laid and prosecuted by PPSC and provincial crown attorneys

Competition Bureau methods of detection

  • Immunity and leniency programs (for criminal Competition Act offences)
  • Other methods:
    • Complaints
    • Criminal cartel whistleblowing initiative
    • Partnerships with police forces
    • Outreach to procurement authorities and specific industries
    • Proactive monitoring
    • Efforts to increase public awareness and encourage compliance
    • Pilot project on the use of screens to detect potential bid‑rigging

Partnering with other law enforcement agencies

  • The Bureau works with other police forces in a relatively small number of cases and has MOUs in place with other law enforcement agencies to build awareness and understanding of how we work together, and set protocols to facilitate cooperation
    • Police officers may come across evidence of cartel activity in the course of their investigations. Similarly, Bureau investigators may uncover evidence of other offences. We share information on possible offences
    • We work collaboratively during various phases of joint and parallel investigations, including during activities such as executing searches, conducting wiretaps, performing handwriting analysis, voice recognition analysis, etc.
  • We also participate in multilateral discussions with police forces outside of the context of particular investigations
    • E.g. Meeting with the Canadian Association of Chiefs of Police, participating in the Canadian Anti‑Fraud Centre with other law enforcement agencies

Case example (bid‑rigging): federal government IT

  • In May 2014, the Bureau announced that charges had been laid against one company and six individuals related to a bid‑rigging scheme for IT Services at Library and Archives Canada (LAC)
    • The Bureau began investigating this cartel in 2009 when the matter was brought to its attention by LAC
    • The contracts were estimated to be worth a total of $3.5 million CAD
    • The Bureau's investigation benefitted from cooperation under the Bureau's Immunity Program
    • The evidence suggests that one company and three individuals conspired to rig bids for IT services
    • The other individuals, who were allegedly involved in the conspiracy while employed by LAC, were charged under subsection 80(1) of the Financial Administration Act for allegedly making opportunity for another person to defraud the government

Case example (bid‑rigging): municipal infrastructure

  • The Competition Bureau and Unité permanente anticorruption ("UPAC") of Quebec conducted a joint investigation of the construction industry in a region of Montreal
    • Competition Bureau officers were seconded to UPAC, conducting joint interviews and searches
    • The investigation uncovered evidence of a sophisticated scheme giving preferential treatment to a group of contractors trying to obtain contracts for municipal infrastructure projects
    • As a result of the investigation, 77 criminal charges were laid against 9 companies and 11 individuals
    • The charges included 44 charges of bid‑rigging under the Competition Act, and other criminal charges under the Criminal Code including corruption in municipal affairs, breach of trust, improperly influencing a municipal official, and fraud upon the government
    • Currently being prosecuted concurrently by federal and provincial crown attorneys

Charbonneau commission

  • In 2011, the provincial government of Quebec established a Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry (the "Charbonneau Commission")
    • The Charbonneau Commission’s mandate included examining possible solutions and making recommendations establishing measures to identify, reduce and prevent collusion and corruption in awarding and managing public contracts in the construction industry in Quebec
    • Competition Bureau officials met with representatives of the Charbonneau Commission to provide background on the Competition Bureau’s investigative processes and programs, and a Competition Bureau official testified before the Commission
    • Significant media attention garnered by the Charbonneau Commission improved public awareness of the Bureau’s activities and the laws it enforces, particularly the offence of bid‑rigging
    • The Charbonneau Commission’s final report recognized the importance of cooperation and coordination between law enforcement agencies in the fight against domestic corruption

Concluding thoughts

  • The benefits of collaboration are undeniable
  • To address the challenges inherent to this type of collaboration, the Competition Bureau:
    • Collaborates to build relationships and trust with other law enforcement agencies
    • Communicates early and often where there may be issues of mutual concern
    • Cooperates with other agencies during specific investigations
  • Although these cases represent a small portion of our work, we recognize the value of cooperation to combat collusion and corruption
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