Cartels and bid-rigging
Learn more about cartels and bid-rigging, and how to report these criminal activities when you see them.
What is a cartel?
A cartel is a group of independent businesses whose goal is to lessen or prevent competition. It is formed when businesses agree to act together instead of competing with each other, while maintaining the illusion of competition.
The most common forms of cartel conduct are:
- rigging bids, which is when two or more individuals conspire to manipulate a tendering process
- fixing prices, which is when two or more competitors agree on pricing for the supply of goods or services
- market allocation, which is when two or more competitors agree to allocate sales, territories, customers or markets amongst themselves
- restricting supply, which is when competitors agree to limit the quantity of goods or services produced or supplied to a market
Cartels are illegal because they lead to higher prices, decreased product choice and less innovation. They syphon off billions of dollars from the global economy each year.
What is bid-rigging?
Bid rigging occurs when two or more individuals agree that, in response to a call for bids or tenders, one or more of them will:
- not submit a bid
- withdraw a bid
- submit a bid arrived at by agreement
The offence of bid rigging is committed only if the person requesting the bids or tenders is not informed beforehand about the agreement made between the parties.
Bid rigging is a serious crime that eliminates competition among suppliers, increases costs, and harms the ability to hold fair and open competitions. Whether this occurs on government projects or in the private sector, these increased costs are ultimately passed on to the public.
Bid rigging typically involves competitors agreeing to artificially increase the prices of goods or services offered in bids to potential customers.
As bid-rigging is a criminal offence under Canada’s Competition Act, firms and individuals convicted of bid rigging face fines at the discretion of the court or imprisonment for up to 14 years, or both.
Report bid-rigging and cartel activity
If you are an employee of a company that you believe may be involved in bid-rigging or other cartel activity, you can report your concerns to the Competition Bureau. The Bureau, Public Services and Procurement Canada (PSPC), and the Royal Canadian Mounted Police (RCMP) established the Federal Contracting Fraud Tip Line to report concerns. The information gathered through the tip line or online form will be shared with the Bureau, the RCMP and PSPC.
