Public Prosecution Service of Canada Continues to Settle Engineering Bid-Rigging Cases Under Competition Act Prohibition Order Provisions

On June 19, 2020, the Competition Bureau (Bureau) announced that two Canadian engineering firms, SNC-Lavalin (SNC) and Génius Conseil Inc. (Génius), had been ordered by the Superior Court of Québec to pay a combined $2.2 million in relation to an ongoing investigation into bid-rigging on municipal infrastructure contracts in Québec between 2003 and 2012 (see News Releases, SNC-Lavalin to pay $1.9 million in fourth Québec bid-rigging settlement and Génius Conseil Inc. to pay $300,000 in fifth Québec bid-rigging settlement, Competition Bureau, June 19, 2020). For more information about bid-rigging under the Competition Act, R.S.C. 1985, c. C-34, see Practice Note, Canadian Bid-Rigging Law. See also Detecting Bid-Rigging Checklist and Deterring Bid-Rigging Checklist.

According to the Bureau, SNC and Génius previously reimbursed the bid-rigging related overpayments under Québec’s former Voluntary Reimbursement Program, which was designed to recover amounts improperly paid as a result of fraud in relation to public contracts. Génius also cooperated with the Bureau’s investigation under its Leniency Program, whereby parties that do not qualify for full immunity (for example, are not the first to disclose an offence to the Bureau) may still qualify for leniency in sentencing. For more information about the Bureau’s Immunity and Leniency Programs, see Practice Note, Competition Bureau Immunity and Leniency Programs and Calculation of Competition Act Fines Checklist.

Dessau, WSP Canada and Norda Stelo have also previously been ordered to pay a total of $6.65 million for their roles in this case. As part of the most recent settlements, the Court also ordered SNC-Lavalin to maintain its competition compliance program. For more information about competition compliance programs, see Practice Note, Competition Law Compliance Programs and Standard Document, Competition Law Compliance Program.

The settlements in these recent cases were apparently reached under section 34(2) of the Competition Act, which allows a superior court to prohibit the commission of an offence under Part VI of the Competition Act (including bid-rigging) where a person “has done, is about to do or is likely to do any act or thing constituting or directed toward the commission of the offence.” For more information about criminal enforcement under the Competition Act, see Practice Notes:

It is not clear, however, why corporate prosecutions or guilty pleas were not pursued against some of the accused firms in this ongoing investigation (for example, those not participating in the Bureau’s Immunity and Leniency Programs).

Unlike section 34(1) of the Competition Act, which allows a court to prohibit the continuation or repetition of an offence following a conviction, section 34(2) is broadly worded to allow settlements for criminal conduct under the Competition Act where it merely “appears” to a court that a person “has done, is about to do or is likely” to commit an offence under Part VI.

Section 34(2) prohibition orders are a unique remedy under the Competition Act in that they do not require a conviction as a prerequisite or admission of guilt. This type of prohibition order (that is, one issued in lieu of a conviction) also precludes the commencement of subsequent proceedings for offences based on the same or substantially the same facts. The punishment for violating a prohibition order is either a fine in the discretion of the court or up to five years imprisonment (section 34(6), Competition Act). Section 34(2) of the Competition Act also differs from the Bureau’s Leniency Program, which requires a guilty plea as one condition of participation.

Bid-rigging settlements under section 34(2) of the Competition Act have several benefits for the accused, which include no criminal conviction, no imprisonment (in the case of individuals) and, perhaps most importantly for engineering and other firms supplying services for Federal Government projects, no debarment under the Government’s Integrity Regime (see About the Integrity Regime, Government of Canada). Under the Integrity Regime, a supplier will be ineligible to supply services to the government if, among other things, it or any of its affiliates committed a bid-rigging offence under section 47 of the Competition Act within the past three years.

Settlements under section 34 of the Competition Act also have the additional benefit for the settling parties of less transparency than would occur in situations where the penalties imposed followed a conviction (for example, no agreed statement of facts).

While the prohibition order provisions under section 34 of the Competition Act are not new, they appear to have gained increased importance for corporate parties seeking to avoid both criminal conviction and sanctions under the Integrity Regime.