Competition Bureau Investigation: How Should Corporations Respond?

It’s no secret that there has been a significant rise of condominium living in Canada, particularly in the Greater Toronto Area. It is estimated that three-quarters of all new homes purchased in the GTA are condominiums. The increase in number of these kinds of properties in Toronto, as well as throughout Ontario, has prompted much reform to the industry, including recent revisions to the Condominium Act, 1998.

Another development occurred in May this year, when the Competition Bureau ordered 141 condominium boards across the GTA to disclose records relating to renovation contracts. Competition Bureau spokesperson Marie-France Faucher told reporters that the bureau is looking into “allegations of bid-rigging and conspiracy in the supply of condominium refurbishment services in the Greater Toronto Area”. Both bid-rigging and conspiracy are criminal offences under the Competition Act. The investigation is interested in renovations going as far back as August 2006, for projects in common areas such as lobbies, parking garages and washrooms.

The investigation appears to be looking specifically at the suppliers of goods used in renovations and the companies that oversee the projects – such as interior designers and engineers – to ascertain whether there has been any evidence of collusion or price-fixing. The bureau has stressed that it is not the condo corporations themselves who are suspected of criminal activity; rather, they may have been victims of unfair competition.

The Competition Bureau has emphasized that the investigation is ongoing, and that they have not as yet found evidence of criminal activity by condominium boards. The investigation will likely take a number of years.

What does this mean for condominiums?

The request has left many condominium boards scrambling to get their files in order. While the investigation doesn’t specifically target condo corporations, boards are advised to respond to the request within the 90-day timeframe. And, at this stage, any costs associated with gathering the documents and responding to the Bureau will come out of the corporation’s pocket.

Moving forward, it may also be prudent for condominium corporations to adopt stricter guidelines in order to prevent the possibility of bid-rigging by competing suppliers, and to ensure the procurement process is transparent and fair.

Amendments to the Condominium Act will introduce new contract procurement requirements, which may tighten the bidding and tendering process (at least for some types of contracts). The relevant new section of the Act is Section 39.1, which states as follows:

A corporation shall not enter into a prescribed contract or transaction unless the procurement process and other contracts or arrangements that the corporation entered into in relation to the contract or transaction meet the prescribed requirements.

The “prescribed requirements” – in the form of Regulations under the amended Act – are currently in development.

If condominium corporations have any concerns with this issue, or with complying with the Competition Bureau’s request, feel free to contact us.