Competition Bureau conducting criminal probe in Ontario condo renovation market
Canadian Competition & Regulatory Law
Steve Szentesi & Mark Warner
May 26, 2016
Earlier today, the Globe and Mail reported that the Canadian
Competition Bureau (Bureau) has launched a widespread criminal
investigation into the condominium renovation industry in Ontario.
According to the Globe, the focus of the Bureau’s investigation appears
to be potential criminal conspiracy and bid-rigging in the provision of
renovation services to condominiums from 2006-2014 with more than 100
condominium boards being compelled to produce records (which appear to
be by way of section 11 orders under the Competition Act).
While the Competition Bureau conducts criminal investigations in
private, the Globe’s reporting indicates that this investigation
follows earlier compulsory production orders served on renovation
companies, that the focus of the probe is the renovation firms (and
possibly condo management firms) and not condominium owners and is in
relatively early stages.
A Bureau spokesperson was interviewed in connection with the
investigation. However, is not clear whether the Bureau may proceed or
against whom – for example, whether the Bureau may seek prosecution
against any of the renovation companies targeted in the investigation,
condominium management firms or others, grant immunity or leniency to
any of those involved or enter into settlements with targets. No
violations of the Competition Act have yet been established.
This case is, however, very interesting and raises a number of
important issues for companies and individuals that may be involved in
the Bureau’s investigation. These include whether they have violated
the Competition Act, should seek immunity or leniency from the Bureau
or obtain advice relating to potential criminal exposure related to the
document production process (or more broadly).
The case also shows the Bureau’s interest in pursuing competition in
high-consumer-impact sectors, including real estate and construction.
In the real estate sector, it follows the recent landmark TREB abuse of
From a competition compliance and conspiracy/bid-rigging perspective,
condominium corporations may also consider seeking advice related to
potential criminal or civil exposure in relation to the Bureau’s
production orders and enhancing or adopting guidelines and procedures
to reduce the potential of collusion or bid-rigging among competing
suppliers to their corporations.
Condominium owners and boards who believe they may have suffered loss
or damage as a result of any of the alleged anti-competitive conduct
under investigation by the Bureau may wish to consider the scope for
actions to recover those damages under the private remedy set out in
section 36 of the Competition Act.
It is also worth noting that the Ontario Condominium Act was amended in
December 2015 to forbid condominium corporations from entering into
certain contracts or transactions unless the procurement process meet
certain requirements to be prescribed in a regulation. To date
section 39.1 has not yet been proclaimed by the Lieutenant Governor and
the associated regulations have yet to be published.
The Ontario Ministry of Government and Consumer Services that is
responsible for the Condominium Act has indicated that the regulations
will likely require sealed bids for certain procurement transactions
and set out the procedures that would need to be followed and under
what circumstances (e.g., for contracts exceeding a certain value). In
light of the Globe’s article, condominium boards may wish to consider
making representations to the Ministry about the regulations that are
in the process of being drafted if they have not already done so.