Archived — Competition Bureau exposes sewer services cartel in Quebec

Backgrounder

November 22, 2011


The Investigation

The Bureau began investigating this bid-rigging scheme in the summer of 2009 after being approached by a company through the Bureau's Immunity Program. Another competitor cooperated with the investigation by way of the Bureau's Leniency Program.

The Bureau executed search warrants in the Fall of 2009 and 2011. Bureau officers searched six sites, seized thousands of documents and interviewed numerous witnesses.

Bid-rigging and the Competition Act

Under the Competition Act, it is a criminal offence for two or more bidders, in response to a call for bids or tenders, to agree that one party will refrain from bidding, withdraw a submitted bid, or agree among themselves on bids submitted, without informing the person calling for the bids of this agreement.

Given that the conduct in question occurred prior to March 2009, the accused face the penalties for the previous bid-rigging provision of the Act: a possible prison sentence of up to five years and/or a fine at the discretion of the court. In March 2009, the Act was amended and the penalties for bid-rigging increased to a fine at the discretion of the court and/or a prison sentence of up to 14 years.

The conspiring companies pre-determined the winners of the calls for tender by agreement. The companies then submitted inflated token bids on calls for tenders that they were not pre-selected per their secret agreement to win, so that the contract was won by a pre-determined conspiring company. This practice led the tendering authorities into believing that their tendering processes were competitive.

Recent studies suggest that in cases where bid-rigging occurs, the price paid for goods or services typically increase by approximately 20 per cent, which is ultimately passed on to the public whether this happens on government projects or in the private sector.

In addition to its enforcement activities, and in an effort to prevent and detect such criminal activity, the Bureau offers educational sessions to businesses and government regarding bid-rigging. The Bureau has given over 250 educational presentations to procurement agencies across Canada since 2005.

For information on how to detect, prevent and report suspected incidences of bid-rigging, please see the Bureau's presentation, Bid-Rigging: Awareness and Prevention.

Summary of charges laid — November 22, 2011
Companies/Individuals charged Value of contracts bid on Value of Contracts won Number of charges

As per the plea agreement reached with the Public Prosecution Service of Canada and entered into court on November 22, 2011.

Canalisation Nord Américaine Ltée/
Pasquale Salvo
$141,438 $48,801 3
Groupe Esthétix/
Sylvain Deschamps
$208,351 $150,164 4
Colmatec Inc./
Rénald Drouin
$1,390,732 $237,480 20
Chalifoux Sani Laurentides Inc./
Michel Chalifoux
$2,534,770 $594,442 23
Kelly Sani-Vac Inc./
Daniel Kelly
$2,583,593 $763,234 28
MSC Réhabilitation Inc. $888,299 $361,911 1Footnote *

Detailed List of contracts and accused — November 22, 2011

Summary of additional charges laid — December 20, 2012
Companies/Individuals charged Value of contracts bid on Value of Contracts won Number of charges
Michel Chalifoux $271,390 $216,100 7
Kelly Sani-Vac Inc./Daniel Kelly $485,435 $373,383 16
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