Canada: Call Me Maybe? ONCA Says Standing Offers Could Be Contract Bids Under Bid-Rigging Offence

April 3, 2013 the Ontario Court of Appeal released its reasons for decision in R v. Dowdall, affirming the Superior Court's earlier decision to commit 17 defendants to stand trial on charges of bid-rigging under s.47 of the Competition Act. The defendants had argued that tenders submitted to pre-qualify as approved suppliers, or to create a standing order, if and when such services were required, was not a "bid or tender" and thus fell outside the ambit of the prohibition against bid-rigging.

Both the Superior Court and Court of Appeal agreed that the preliminary inquiry judge reasonably concluded that there was some evidence that the process of obtaining a Standing Offer Agreement was contractual and could be considered a "request for bids or tenders" under the bid-rigging offence.

This case stands in stark contrast to the recently-decided Quebec Court case R v. Al Nashar et al. whereby similar charges of bid-rigging were dismissed once the court determined that a request for quotes from subcontractors did not amount to a "call or request for bids or tenders" since the person requesting the bids was under no obligation to accept the bids.


Bid-rigging is a criminal offence which deals specifically with collaborations between independent, third party competitors with respect to responses to calls for bids or tenders. Section 47 of the Competition Act sets out the elements of the offence, which the Crown must prove beyond a reasonable doubt:

  1. a call or request for bids or tenders;  
  2. two or more bidders enter into an agreement related to the submission, withdrawal or decision not to submit a bid or tender;  
  3. bids were submitted, withdrawn or not made pursuant to that agreement; and  
  4. the person who called for the tenders was not made aware of the agreement or arrangement, at or before the time the bids were submitted (or due).

Both the Dowdall and the Nashar decisions were issued pursuant to a preliminary inquiry to determine whether the Crown had enough evidence to make out all the elements of the offense. Both cases ultimately centred on whether the "call or request for bids" from contractors satisfied the first element of section 47.

Most bid-rigging cases centre on the second element - whether there is an agreement - however, as whistle-blowers and Competition Bureau investigations become more common, the body of jurisprudence is growing with respect to other elements as well.


In early 2005, the Competition Bureau investigated the bidding processes for 10 IT services contracts worth $67 million. These services were with various government departments: Canada Border Services Agency, Public Works and Government Services Canada, and Transport Canada. The case and subsequent appeals dealt with the Transport Canada contracts.

According to the Bureau, evidence indicated that the bidders' objective was to collectively win and divide the contracts awarded, while blocking competitors who were not a part of the conspiracy. As a result of the agreement, the bidders were allegedly able to maximize the rates at which services were to be provided to the various departments.

In Dowdall, the RFPs in question were for the purpose of creating a standing order for the potential provision of I.T. services – essentially pre-qualifying certain potential suppliers. A standing offer is an offer from a potential supplier to provide goods and/or services at pre-arranged prices, under set terms and conditions, when and if required. If the government issues a "call-up" against the standing offer then those who have pre-qualified will have a chance to bid for the services. The government is under no actual obligation to purchase until that time, and the applicants are under no obligation to respond to the call-up.

The applicants argued that these arrangements could not be considered requests for bids, since they did not result in a contract for services. The fundamental nature or goal of the procurement process was merely to create a list of potential qualified suppliers with no specific or clearly identified project or commitment to engage any services at all.

The preliminary hearing judge found that there was sufficient evidence to infer that the process of obtaining a Standing Offer Agreement was contractual and would therefore constitute a bid, and committed the appellants to stand trial for bid rigging under s. 47 of the Competition Act and conspiracy to commit bid rigging contrary to s. 465(1) of the Criminal Code.

The accused applied to the Superior Court of Justice in Ontario for certiorari of the preliminary decision and appealed that decision to the Ontario Court of Appeal. Each court in turn dismissed the application, affirming the preliminary inquiry judge's decision.

In the end the Superior Court agreed with the preliminary inquiry judge and found that there was value in obtaining the Standing Offer Agreement and these agreements could give rise to enforceable rights and obligations on both parties. As such, there was some evidence from which a jury could infer that the process was contractual.

The Court of Appeal affirmed the lower court's decision with the caveat that they did not agree with any statement made by the superior court judge which could be interpreted as saying that there was no actual contract in this situation. The Dowdall case will now proceed to trial, and could set an important precedent for the scope of processes subject to the law. It stands, however, in stark contrast to a Quebec case, R v. Al Neshar et al., that went the other way.


In early February 2013 the Quebec court held a preliminary inquiry into five potential counts of bid-rigging and levied against nine defendants, all of whom were subcontractors in the business of installing ventilation systems in buildings under construction.

For three of the counts, the same general contractor would prepare a list of potential subcontractors and send each of them a detailed request for tenders. Once the bids were in, he would often enter into negotiations with several of the lowest bidders and eventually make a recommendation to the ultimate client. He was under no obligation to accept the lowest bid or, indeed, any of the bids submitted. The situation was similar with the two other counts; the general contractor was under no obligation to accept the lowest bid and for one count the bid was cancelled altogether.

For all five tenders, the competitors had formed agreements to determine who would submit the lowest bid. Once determined, the other competitors would bid higher than the chosen "winner".

Although on the face of it the general contractor's detailed submission looked like a call for bids, the Court stated that it had to dig further to determine the true intention of the parties.

The testimonial evidence of the contractors showed that they did not consider that they were under any obligation to accept any of the bids; furthermore, clauses in the RFPs specifically stated that one or all of the submitted bids could be rejected without cause.

This was enough for the court to determine that the general contractors did not believe that they would have to accept any of the bids. As such, the court found that the general contractor's submission to the sub-contractors did not amount to a "call or request for bids or tenders" within the meaning of section 47 and the accused were discharged.


Dowdall and Nashar agree that the intention of the parties to create contractual obligations is at the heart of whether a request for proposals falls within the words "bid or tender" as used in s. 47 of the Competition Act. The Ontario Court of Appeal in Dowdall, however, came to a sharply different finding based on very similar facts – in part by taking a more purposive approach to interpretation of Canada's prohibition against bid-rigging.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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