Canada: Canada's Competition Bureau Loses Major Bid-Rigging Case: 60 Not Guilty Verdicts

In a further blow to the track record of the Competition Bureau and the Public Prosecution Service of Canada in contested criminal trials, on April 27, 2015, a jury in the Ontario Superior Court of Justice found nine defendants not guilty on 60 charges of bid-rigging and conspiracy to rig bids. Another individual - David Watts, who waived his right to a preliminary inquiry, and sought an order directing a verdict of acquittal for himself only - was acquitted in February, 2015 of similar charges in a directed verdict.

The Competition Bureau had commenced a criminal inquiry in 2006 into bid-rigging allegations against 14 individuals and seven companies, regarding allegations that the accused had coordinated their bids for certain information technology (IT) services contracts with the Canadian federal government. The Attorney General filed the charges in February, 2009. One corporation had sought immunity from the Competition Bureau under its immunity program, in which the corporation and its employees are not prosecuted in exchange for assisting the Bureau with its inquiry and subsequent prosecution.  Two of the individuals pleaded guilty. Prior to the preliminary inquiry, the Crown had dropped charges against one individual.

Following a preliminary inquiry, Justice Adler of the Ontario Court of Justice dismissed the charges against three accused and ruled that the Bureau's case against the remaining nine individuals  and five companies should proceed to trial for bid-rigging pursuant to section 47 of the Competition Act, and conspiracy to rig bids pursuant to section 465(1) of the Criminal Code. Regional Senior Justice Charles Hackland of the Superior Court of Justice dismissed the defendant's application for certiorari of Justice Adler's preliminary inquiry decision in 2012, and in 2013, the Ontario Court of Appeal further refused to quash the lower court's committal of the defendants for trial.

Five defendants chose trial by judge alone, which is expected to be heard in August, 2015.  The remaining defendants proceeded to trial by jury.

Since the jury did not have to provide reasons, it is not clear what prompted their decision to acquit the six individuals and three companies.  That said, reviewing the submissions of the parties and the reasons of Justice Warkentin with respect to David Watts' application for a directed verdict is instructive. On a motion for a directed verdict, the trial judge must commit the accused to trial if there is admissible evidence which could, if believed, result in a conviction.

In the case against Mr. Watts, the Crown (prosecution) argued that Watts committed the criminal offence of conspiracy and violated section 47 of the Competition Act because the companies failed to disclose their collaborations to the person calling the bids or tenders.  The Crown's theory was that the defendants, including Watts, had participated in a "three-bid strategy" through which they unified their efforts to win certain IT services contracts with Transport Canada, Canada Border Services Agency, and Public Works and Government Services Canada. The Crown alleged the defendants participated in numerous meetings and communications; shared information about technical requirements and the pricing of bids; delegated specific roles among themselves in the preparation of bids; maintained a "tracking list" to identify the participants, resources and prices; acted collectively in responding to the calls for bids; and failed to disclose the alleged agreements or arrangements to the person calling for the bids or tenders.

As a result of changes to the request for proposal (RFP) process during the relevant time period, the RFP rules were amended to allow more than one vendor to submit the same "resource" (an IT consultant), and to allow a legal entity to submit more than one proposal. Indeed a Transport Canada witness for the Crown, Ms. Beverly Shawana, testified that, based upon the history for this type of RFP, it was known by Transport Canada that one company, working alone, would not be able to provide all the resources required for the RFP, and "she knew that companies would work together and form joint ventures in order to respond, as they had in the past." Further, Shawana testified that "there was nothing wrong with a vendor company acting as a prime contractor on one proposal and also acting as a subcontractor to another company that submitted a [different] proposal."

In finding that there was no evidence upon which a reasonable jury could return a verdict of guilty regarding either bid-rigging or participation in a criminal conspiracy, Justice Warkentin noted that the Crown had "incorrectly assumed Mr. Watt's involvement in an alleged criminal conspiracy to bid-rig without taking into consideration the particular aspects of the Transport Canada RFP ..." and that the "only conclusion supported by the Crown's evidence is that prior to September 26, 2005, all nine companies were working together to submit one large joint venture, an activity that was entirely legal."  She considered that:

The only inference or conclusion that can be drawn from an assessment of the direct and circumstantial evidence is that Mr. Watts knew about the Team Devon joint venture proposal and participated in that proposal to the limited extent that his role as president of The Devon Group required.  There is nothing illegal in these actions.  It is an entirely unreasonable inference to conclude that Mr. Watts was part of the larger alleged conspiracy.  The Crown has asked the court to interpret the evidence introduced against the other accused as though it also applied to Mr. Watts.

 Following the release of the jury's not guilty verdicts in the case against the six-individuals and three companies, the Competition Bureau issued a statement by John Pecman, the Commissioner of Competition, indicating that the Crown is considering whether to appeal the acquittals.

As noted, the trial of the remaining defendants is scheduled to proceed later this summer.  It will be interesting to see how the prosecution intends to approach those cases in view of what has to be considered a very disappointing result for the Competition Bureau and the Public Prosecution Service of Canada.

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