Quebec Court of Appeal Ruling Signals That Bid-Rigging Is a Serious Offence Warranting Imprisonment

by Practical Law Canada Competition
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This Legal Update discusses a recent decision of the Quebec Court of Appeal, which imposed mandatory prison sentences for various offences of fraud and forgery in relation to bid-rigging in the awarding of public contracts. The decision is noteworthy in that it reversed a lower court ruling that had imposed only conditional sentences to be served in the community. The Court of Appeal stressed that the lower court's conditional sentences did not reflect the seriousness of the offences and were inconsistent with the principles of public condemnation and denunciation.
A recent decision by the Quebec Court of Appeal in R c. Fedele, 2018 CarswellQue 10342 (C.A. Que.) (English language summary) sends a strong signal that bid-rigging offences, particularly in respect of the awarding of public contracts, will be treated very seriously and warrant mandatory prison sentences.

Background

This case arose from a joint investigation by the Competition Bureau and Quebec's Permanent Anti-Corruption Unit (UPAC) relating to a system of bid-rigging that targeted public works contracts in the Saint-Jean-sur-Richelieu region of Quebec. See The Competition Bureau's month in review — 2018: November — 2018.
At trial, several individuals were found guilty of various offences of fraud and forgery, contrary to the Criminal Code, R.S.C. 1985, c. C-46, in relation to bid-rigging in the awarding of public construction contracts at artificially inflated prices. These contracts together were valued at more than $15 million.
The trial judge sentenced the individuals to conditional sentences to be served in the community ranging from 18 months to 24 months less a day.
The Crown appealed these conditional sentences and asked the Court of Appeal to substitute the sentences sought at trial, which were terms of imprisonment ranging from 21 months to 48 months, depending on the individual. The Crown argued that the conditional sentences were too lenient and did not reflect the seriousness of the offences.

Court of Appeal Decision

The Court of Appeal agreed with the Crown and held that, for three of the four individuals, the trial judge's conditional sentences risked minimizing and trivializing the highly blameworthy behaviour involved. The Court stated that the conditional sentences were inconsistent with the principles of public condemnation, deterrence and denunciation.
The Court of Appeal characterized the conduct as involving large-scale fraud, which it identified as fraud involving more than $500,000. It noted that such large-scale fraud has typically attracted sentences of three to five years. In the result, the Court imposed terms of imprisonment for the three individuals ranging from 18 to 36 months.
In discussing the seriousness of the offences, the Court of Appeal highlighted that the maximum sentence for fraud under the Criminal Code was increased in 2004 from 10 years to 14 years of imprisonment. In that regard, it is worth observing that the maximum sentence under the conspiracy and bid-rigging provisions of the Competition Act, R.S.C., 1985, c. C-34 was similarly increased in 2009 to a maximum of 14 years of imprisonment. For a discussion of the conspiracy and bid-rigging offences under the Competition Act, see Practice Notes, Canadian Conspiracy (Cartel) Law, Canadian Bid-Rigging Law and Criminal Competition Law Enforcement.
The Court of Appeal also stressed that fraud in respect of public contracts was particularly egregious because of the threat such conduct poses to the credibility of political and social institutions and the risk of undermining the rule of law.

Implications

The Fedele case sends a strong message that bid-rigging, particularly in regard to the awarding of public contracts, is a serious offence that warrants imprisonment. While Canada at one time had a reputation of dealing with bid-rigging and conspiracy offences primarily through sentences served in the community, rather than in jail, that approach has definitely changed in recent years. This case is the latest example, and one of the clearest, of a toughening law enforcement stance that regards imprisonment as a necessary tool to deal with collusion.
Although this case proceeded under the fraud and forgery provisions of the Criminal Code, the essential concern was bid-rigging in the awarding of public contracts. The same concern arises under the bid-rigging and conspiracy provisions of the Competition Act, which is evident in the Competition Bureau's involvement in jointly investigating this matter along with the UPAC. Moreover, the maximum prison terms for these offences under both Acts have been increased to 14 years, reflecting the seriousness with which the federal government regards such conduct.
The Fidele case further suggests that multi-year sentences may be appropriate for instances of "large-scale fraud", which it defined as fraud involving more than $500,000. This monetary amount will often be exceeded in government contracts.
In short, individuals that have engaged in collusion, particularly bid-rigging in respect of public contracts, should expect that the Competition Bureau will seek, and Courts will impose, mandatory jail sentences.
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Published on 06-Dec-2018
Resource Type Legal update: archive
Jurisdiction
  • Federal (Canada)
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