Investigating cartels

What is a cartel?

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, consult Cartels in Canada or About cartels.

How to report cartels?

If you have information or evidence about possible cartel activities, you must contact the Bureau.

There are several ways to contact the Bureau that are safe and confidential. You can:

  • File a complaint online.
  • Become a whistleblower by calling 1‑800‑348‑5358 and pressing “0” to speak with an Information Officer of the Competition Bureau. The Whistleblowing Initiative protects your identity and guards you against retaliation.
  • If your information relates to federal contracts, please call the Federal Contracting Fraud Tip Line at 1‑844‑365‑1616 or file your tip online. You do not have to provide your name.
  • If you are a current or former cartel participant and you help the Bureau unveil illegal activities, you may be eligible to the Immunity or Leniency program.
How the Bureau fights cartels?

Combatting cartels is a top priority for the Competition Bureau and competition authorities worldwide. The Bureau will continue to vigorously pursue all those involved in cartel activities.

When the Bureau becomes aware of cartel activities, it investigates and if there is reason to believe that an offence has been committed, or is about to be committed, the Commissioner of Competition may launch a formal inquiry.

Once an inquiry has begun, investigators have access to powers under the Competition Act or the Criminal Code to gather evidence.

Where there is sufficient evidence of a cartel offence, the Commissioner of Competition may refer the matter to the Director of Public Prosecutions for criminal prosecution.

For more information on the approach the Bureau takes to assessing collaborations between competitors, consult the Competitor Collaboration Guidelines.

What are the penalties?

Charges can be laid against individuals and corporations that engage in cartel offences.

Penalties for conspiracies to fix prices, allocate markets or restrict supply can include fines of up to $25 million and/or up to 14 years of imprisonment.

Penalties for bid‑rigging can include a fine in the discretion of the court and/or up to 14 years of imprisonment.

Cartel victims who have lost money as a result of a conspiracy may take private legal action against cartel participants for damages.

Cartels and the Competition Act

Canada's Competition Act contains several provisions that prohibit cartels.

Depending on the nature of the arrangement, a cartel could be unlawful under more than one of these provisions.

For more information on the approach the Bureau takes to assessing collaborations between competitors, consult the Competitor Collaboration Guidelines.

Conspiracies under section 45

section 45 is the cornerstone provision of the Competition Act.

It makes it a criminal offence when two or more persons agree or arrange to prevent or lessen competition unduly or to unreasonably enhance the price of a good or service. This offence is known as a “conspiracy” and is punishable by fine of up to $25 million and/or imprisonment for up to 14 years.

To convict a person or a business of a conspiracy offence, the prosecutor must prove “beyond a reasonable doubt” that the accused participant carried out the specific conduct prohibited by section 45 and that the accused intended to commit the offence.

In addition, the court must determine whether the agreement, if implemented, would or would likely prevent or lessen competition unduly.

Foreign directives under section 46

Section 46 makes it a criminal offence for a company carrying on business in Canada to implement any foreign directive intended to give effect to a conspiracy entered into outside of Canada that would contravene section 45 if it had been entered into in Canada.

This provision is targeted specifically at international cartel activity affecting Canada. It allows the application of the Competition Act even in situations where the actual conspirators are not located or incorporated in Canada. Penalties include a fine in the discretion of the court.

For more information on the Bureau’s work internationally, consult International efforts.

Bid‑rigging under section 47

Section 47 makes it a criminal offence for two or more bidders, in response to a call or request for bids or tenders, to agree that one party will refrain from bidding, withdraw a submitted bid, or to agree among themselves on bids submitted, without informing the person calling for the bids of this agreement. Penalties for bid‑rigging include a fine in the discretion of the court and/or a prison sentence of up to 14 years.

Private legal action under section 36

Under section 36, victims of cartel activity may take private legal action against the participants for damages.

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