Compliance Bootcamp Lesson #2: Avoiding Business Collusion

Part 2: Test your knowledge on how to spot and avoid business collusion

Question 1:

Which of the following is a form of criminal collusion between businesses?

Answer for choosing E

Correct! A conspiracy refers to an agreement that businesses form to control a market and not compete with one another. For example, two or more businesses may conspire to fix prices, restrict output, allocate markets, or rig bids for goods or services.

Answer for choosing A, B, C, and D:

The correct answer is: E. Businesses who conspire to any of the above can harm competition because they typically result in higher prices for consumers, decrease product choice and lessen innovation.

 

Question 2:

True or False: A casual agreement between two companies about the prices they charge would be considered criminal collusion.

Answer if choosing true:

Correct! Any agreement about pricing harms competition. It can be big or small with various degrees of formality and secrecy.

Answer if choosing false:

The correct answer is: True. Some illegal agreements might be highly structured with rules and a monitoring and enforcement regime. However, a loose verbal arrangement entered into by a group of local business people during a dinner conversation could still be considered collusion under the Competition Act.

 

Question 3:

Business is slowing down. You meet with your main competitor and agree to divide up the remaining business you both compete for in your region. You will bid only for the northern area service contracts, and he will bid only for the southern area service contracts. You are both free to set whatever prices you wish, but you will not bid against each other for any contracts. This is an example of:

Answer if choosing C:

Correct! The Competition Act prohibits agreements between competitors in respect of a product "to allocate sales, territories, customers or markets for the production or supply of the product". This provision prohibits all forms of market allocation agreements between competitors, including agreements between competitors to not compete with respect to specific customers, groups or types of customer, in certain regions or market segments, or in respect of certain types of transactions or products.

Answer if choosing A, B, D and E:

The correct answer is: C. The Competition Act applies to agreements to not compete with respect to direct sales to distributors, resellers or customers, as well as agreements entered into by suppliers to not compete in respect of indirect sales that are made through distributors or resellers. This provision prohibits market allocation agreements between actual and potential competitors.

 

Question 4:

True or false: You reach an agreement with a competitor not to bid on one construction project and your competitor agrees not to bid on the next one. The contracts are with private companies and don’t involve government procurement. There are much bigger players in the construction industry so you are unlikely to get in trouble.

Answer if choosing True:

The correct answer is: False. Even small conspiracies and bid-rigging schemes between competitors and bid-rigging arrangements can reduce competition and have very serious consequences on the local economy. Targeting local and regional conspiracies and bid rigging arrangements is a key part of the Competition Bureau’s enforcement efforts.

Answer if choosing False:

Correct! Even small conspiracies and bid-rigging schemes between competitors and bid-rigging arrangements can reduce competition and have very serious consequences on the local economy. Targeting local and regional conspiracies and bid rigging arrangements is a key part of the Competition Bureau’s enforcement efforts.

 

Question 5:

Which of the following is fair game when submitting a bid for a contract?

Answer if choosing C:

Correct! When submitting a bid to win a contract, don’t engage in communications with competitors about competitively sensitive information.

If answering A:

The correct answer is: C. When competitors agree upfront who will win the contract and other bidders ensure their bids are less attractive, it is called cover bidding and is prohibited by the Competition Act.

If answering B:

The correct answer is: C. When competitors agree not to bid, or to withdraw a bid to make it easier for a specific bidder to win, it is called bid suppression and is prohibited by the Competition Act.

If answering D:

The correct answer is: C. When competitors agree to take turns submitting bids, it is called bid rotation and is prohibited by the Competition Act.

 

Question 6:

If you are seeking bids by other businesses to supply your company with products or services, it is important to:

Answer if choosing E:

Correct! These are all important steps you can take to protect yourself from bid-rigging. Consult our toolbox for more tips on detecting, preventing and reporting bid-rigging.

Answer if choosing A, B, C or D:

The correct answer is: E. These are all important steps you can take to protect yourself from bid-rigging. Consult our toolbox for more tips on detecting, preventing and reporting bid-rigging.

 

Question 7:

Which of the following are potential consequences for those who participate in an agreement to fix the price of a product or service?

Answer if choosing D:

Correct! In addition to harm to your reputation and loss of customers, you and your business face significant fines and jail time.

Answer if choosing A, B or C:

The correct answer is: D. Penalties for price-fixing include fines up to $25 million, up to fourteen years in prison, or both. Negative publicity can also hurt your business long term.

 

Question 8:

Which of the following are potential consequences if competing businesses participate in a bid-rigging agreement?

Answer if choosing C:

Correct! If competing businesses decide to participate, they could face fines at the discretion of the court. On top of fines, individuals could face up to 14 years in prison.

Answer if choosing A or B:

The correct answer is: C. If competing businesses decide to participate, they could face fines at the discretion of the court. On top of fines, individuals could face up to 14 years in prison.

 

Question 9:

True or False: Building a compliance program for your business, no matter how big or small, will help you and your company identify and detect things that you and your employees might be doing wrong.

Answer if choosing True.

Correct! The Competition Bureau has detailed guidance to help you build a credible and effective compliance programme.

Answer if choosing False:

The correct answer is: True. A compliance program tailored to your specific business will help protect you from the negative consequences of potentially illegal activity. The Competition Bureau has detailed guidance to help you build a credible and effective compliance programme.

 

Question 10:

True or False: You are the president of your company and you have found out from an internal review that your company has been involved in collusion. If you come forward, there are means to protect you and your company from prosecution.

Answer if choosing True.

Correct! Under the Bureau’s Immunity Program, immunity may be available for those that bring these issues to the Bureau’s attention early. If immunity is not available you and your company may be eligible for lenient treatment under the Bureau’s Leniency Program. Maintaining a compliance program is an effective way to avoid this situation going forward.

Answer if choosing False:

Answer if choosing False: The correct answer is: True. Under the Bureau’s Immunity Program, immunity may be available if you are the first to bring these issues to the Bureau’s attention. If immunity is not available, you and your company may be eligible for lenient treatment under the Bureau’s Leniency Program.

 

Question 11:

You are involved in an illegal agreement with your competitors, and one of those competitors begins to cooperate with the Competition Bureau. You would like to cooperate too. You may qualify for lenient treatment in sentencing if you and your business:

Answer if choosing E:

Correct! After a first business has applied for immunity, other businesses who cooperate with the Bureau can qualify for leniency if all the requirements contained in the Leniency Programme are met.

Answer if choosing A, B, C or D:

The correct answer is E. After a first business has applied for immunity, other businesses who cooperate with the Bureau can qualify for leniency if all the requirements contained in the Leniency Programme are met.

 

Question 12:

You suspect that the company you work for is colluding with competitors, perhaps to rig bids on government contracts, to charge higher prices or to divide up customers or territories. You should:

Answer if choosing D:

Correct! If you suspect illegal activity, reporting it is the right thing to do. Report illegal activity through our Whistleblowing Initiative and we will keep your identity secret. Whistleblowers are also protected by law. It is against the law for your employer to retaliate against you, or to threaten to do so, if you provide the Competition Bureau with information.

For collusion relating to federal government contracts, you can submit a tip using the Federal Contracting Fraud Tip Line. The tip line is jointly operated by three federal agencies: the Competition Bureau, Public Services and Procurement Canada, and the Royal Canadian Mounted Police.

Answer if choosing A, B, or C:

The correct answer is D) Both B and C. If you suspect illegal activity, reporting it is the right thing to do.

Report illegal activity through our Whistleblowing Initiative and we will keep your identity secret. Whistleblowers are also protected by law. It is against the law for your employer to retaliate against you, or to threaten to do so, if you provide the Competition Bureau with information.

For collusion relating to federal government contracts, you can submit a tip using the Federal Contracting Fraud Tip Line. The tip line is jointly operated by three federal agencies: the Competition Bureau, Public Services and Procurement Canada, and the Royal Canadian Mounted Police.

 

Question 13:

True or false: You have been invited to attend a business meeting with employees from other companies in your industry to discuss upcoming projects in your area. It is likely that prices or bids will be discussed. You should decline the invitation and report it to the Competition Bureau.

Answer if choosing True.

Correct!

Answer if choosing False:

The correct answer is: True. Protect yourself and your business by reporting any attempts by competitors to communicate with you about prices or bids.

 
 Report a problem
Date modified: