Quebec-based street and traffic light supplier Tassimco Technologies Canada Inc. has pleaded guilty to bid rigging following a Competition Bureau investigation.
The investigation was helped, in part, with information garnered through the bureau’s immunity program.
The plea, entered at the Superior Court of Quebec, carries a $50,000 fine and a court order for 10 years, which requires Tassimco to “implement a corporate compliance program and educate its employees about bid rigging and conspiracy offences under the Competition Act,” according to the bureau’s press release.
“We are pleased with this guilty plea,” says competition commissioner Melanie Aitken. “Bid rigging by firms seeking to cheat governments is criminal, and results in Canadian taxpayers paying artificially inflated prices.”
According to the Competition Bureau, Tassimco participated in a bid-rigging process to supply the City of Quebec with light-emitting-diode modules for traffic signals. The tender was intended to build on the city’s energy-efficiency plan and replace incandescent traffic lights.
The bureau conducted an investigation into the initial tender worth $2 million. Following the searches, the City of Quebec cancelled the initial bid and saved five per cent, or $91,000, by issuing a new tender.
The plea follows charges laid in October 2006 against Electromega Ltd. of Candiac, Que., and its president, Alain Lamoureux, and Tassimco of Terrebonne, Que., and its vice president, Conrad DiPietro. Each had been charged with bid rigging under s. 47 of the Competition Act.
Lamoureux passed away in September 2009, but the charges against Electromega remained. The case remains before the court.
Dozens of bid-rigging complaints come in each year, says bureau deputy director Chris Martin. It adopted its whistleblower protection program in the 1990s and recently updated it because similar programs around the world have proven effective in combating cartels.
While he would not speak directly to the Tassimco investigation, Martin, who works in the bureau’s criminal investigation section, says one example of bid rigging could be two suppliers agreeing not to compete against each other for a contract. This “bid suppression” would allow a single supplier to possibly inflate the cost of its bid.
Where the immunity program comes in is the bureau will agree not to seek criminal charges against one of the companies in the agreement if it comes forward and gives evidence necessary for a conviction.
“There is significant incentive whenever competitors enter into such agreements to cease competing and start colluding together, that they keep it hidden and they actually take steps to avoid it being disclosed,” says Martin.
Aside from bid suppression there are three other main types of bid rigging: cover bidding, bid rotation, and market division.
Cover bidding is an agreement to make inflated bids so the process gives an impression of competition.
Bid rotation is an agreement where a pre-selected supplier submits the lowest bid on a rotating basis.
Market division is where suppliers agree to stay away from each other’s geographical area or specific customers.
“Our immunity process was put in place to have incentives to have participants in such schemes, who could otherwise do this for months and years, to blow the whistle on their co-conspirators,” says Martin. “To come to the bureau and apply for immunity from prosecution in respect to their conduct in return for full co-operation with the bureau’s investigation, up to and including prosecution.”
Martin says bid rigging is not confined to companies seeking to cheat government and can happen in private procurement as well.
Those convicted of bid rigging can face fines, imprisonment, or both at the discretion of the court.