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Competition Bureau Investigation
What Does This Alleged Bid-Rigging and Conspiracy Investigation Mean for Condo Corporations?
By Shawn Pulver | Other articles by Shawn Pulver
The Competition Bureau has launched a widespread investigation into alleged bid-rigging and conspiracy in Toronto's condominium renovation industry. The Ontario Superior Court issued an Order on May 10, 2016 compelling 141 condominium corporations across the GTA to produce records relating to "the budget, tendering, bidding, negotiating and awarding of a contract for renovations to the common areas of the condominium corporation's building(s)." Some of these contracts date as far back as 2007.
While most of the details of the investigation were sealed by the court, the Competition Bureau has stated that condominium corporations are not the subject of the investigation. Rather, the investigation appears to target contractors hired to oversee and carry out work on common areas such as lobbies, party rooms or parking garages, as well as suppliers who provide the goods used in such renovations. The Competition Bureau has explained that "the decision to seek the Orders was based on the fact that condominium corporations have, or are likely to have, information that is relevant to the investigation."
Since condominium corporations are not the target of the investigation, this process will likely end up being more of an inconvenience for condominium boards and property managers than anything else. However, nothing guarantees that the investigations will not expand if the Bureau ultimately discovers that there may have been other unlawful conduct in respect of these or other renovation projects.
At this stage, it is important for condominium corporations to comply with any Orders issued against them by providing all requested information within the 90 day period. Failure to comply may attract prosecution. The information and records obtained by the Order may be used to initiate proceedings. If a proceeding is initiated, the person who swears the affidavit, namely a director of the corporation, may be called as a witness in court.
Best Practices for Boards & Managers
Many condominiums hire professional engineering firms to manage their renovation projects and use a formal bidding process to award their contracts. However, in some cases, the procedures used by property managers and/or boards of directors to select contractors could be greatly improved. Implementing best practices will help condominiums reduce the potential for unfair trading practices among contractors and suppliers providing goods and services to their corporations, and could ultimately save condominium corporations substantial amounts of money.
To ensure that contracts are awarded in an appropriate manner, condominium boards should enhance or adopt guidelines and procedures for managing the tendering process, and be diligent in ensuring that such guidelines are followed. In some cases, this may involve sealed bids. Boards should do their own research, ask questions, and ensure that a sufficient number of companies are invited to bid on contracts. Design companies or engineers should be required to disclose any relationships they have with suppliers and contractors, so as to avoid non-arm's length contracts from being awarded. The forthcoming licensing requirements for property managers should further ensure that best practices are followed in the bidding process.
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