Construction Management Firm and Electrical Contractors Fined For Bid-Rigging

OTTAWA, March 31, 2000 - The Competition Bureau announced today that the Ontario Superior Court has fined three Toronto area companies for bid-rigging. King Pape Holdings Limited (formerly Rae Brothers Inc.), Standard Electric (Toronto, 1985) Inc., and VanJohn Ltd., carrying on business as Ehrlich Electric Company, have all pleaded guilty to bid-rigging under the Competition Act. This ends a lengthy investigation into anti-competitive bidding practices in the Toronto electrical contracting industry.

The Ontario Superior Court of Justice has imposed a fine of $300,000.00 for four counts of aiding and abetting a bid-rigging agreement on King Pape Holdings Ltd., a Toronto area construction management and general contracting company. The Court also imposed a fine of $65,000 on Standard Electric for four counts of bid-rigging and a fine of $12,500 on VanJohn Ltd. for one count of bid-rigging. This illegal activity took place between 1991 and 1993 and was part of a larger bid-rigging scheme in Metropolitan Toronto and surrounding area between 1988 and 1993.

"Bid-rigging is a serious crime that eliminates competition and increases costs for businesses and for consumers" said Konrad von Finckenstein, Commissioner of Competition. "Fines such as these go a long way to deter this sort of blatantly anti-competitive behaviour."

This scheme permitted the electrical contractors to determine amongst themselves who would be the successful bidder on numerous contracts for the renovation of commercial office space. The electrical contractors were, at times, assisted with the bid-rigging by Rae Brothers Inc. who worked on behalf of the companies purchasing the electrical contracting services. The scheme was designed to give the appearance of competitive bids and of competition between the electrical contractors when in fact there was no such competitive bidding process among the parties involved.

In December 1997, February 1998 and July 1999, six other electrical contractors were prosecuted by the Attorney General of Canada and paid fines totalling $2.67 million after pleading guilty to bid-rigging offences as a result of this investigation.

Bid-rigging is an agreement whereby one or more bidders on a contract do not submit bids or where those who do bid on the contract agree to submit a pre-arranged price. It is considered an offence only if the parties to the agreement fail to make their intentions known to the potential purchaser before submitting their bids.

The Competition Bureau offers an education program to assist in the detection and prevention of bid-rigging. The Bureau also has a program by which anyone, including those wishing to remain anonymous, can bring forward information concerning possible violations of the Competition Act.

For more information, please contact:

Cynthia Grant
(819) 994-0349