2015-11-23

Montréal snow removal and practices report, filed on November 23, 2015

Summary

BIG uncovered various collusive schemes and attempts to control the snow removal market in Montréal. Mutual financial compensation, contract assignments and subcontracting are mechanisms amongst other means are used by a select group of contractors to control the distribution of contracts in certain sectors.

SUMMARY

In his 2013 annual report, the auditor general of Montréal drew the attention of the city’s Directorate General (Direction générale) and the boroughs to several indications of collusion in the snow removal industry. The transmission of this report to the Office of Inspector General (OIG), together with various other reports of collusion received by the OIG, prompted the Office of Inspector Géneral to open an administrative investigation. The present report gives an overview of the situation, presents the observations revealed in this context as well as the subsequent recommendations.

The investigation conducted by the Office of the Inspector General, using a deliberately comprehensive approach, confirms the signs of collusion revealed by the auditor general: various schemes of a collusion-like nature and the existence of attempts to control the market in certain sectors of the snow removal industry in Montréal. The schemes used, which will be discussed in detail in this report, and were reported by a large majority of contractors, demonstrate that the market is under the influence of a limited group of contractors who intervene in order to coordinate the assigning of contracts between contractors, when these contractors are neither the assignee nor the assignor. After denouncing the situation to the Permanent Anti-corruption Unit (Unité permanente anticorruption (UPAC)), the Inspector General also reported it to the Commissioner of Competition (Competition Bureau of Canada).

This report also demonstrates that certain practices or clauses in the boroughs’ specifications, particularly with respect to the period during which calls for tenders are issued or the ability to transfer a contract, objectively favour the development of schemes by the contractors. The illegal recourse to sub-contracting, admitted by several contractors, also favours the development of bargaining.

Moreover, certain disparities with respect to the technical requirements, as well as the highly variable size of the snow removal sectors, defined without any apparent justification, limit competition.

As a result, the Inspector General recommends that the Montréal’s City Council, having full jurisdiction with respect to snow removal activity, complete the snow removal policy that it recently adopted, by centralizing, in particular, the establishment of obligatory technical requirements common to all of the boroughs in the specifications, elaborating and drafting specifications specifically intended for snow removal activities, and define the terms for issuing a single call for tenders applicable to all of the sectors whose contracts are set to expire.

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Montréal snow removal and practices report, filed on November 23, 2015