The Ontario government decided to widen Highway 401. The highway project would be carried out in three (3) phases: phase 1, phase 2 and phase 3. Therefore, the government issued three (3) separate calls for tender (also known as calls for bid) i.e., a call for tender for each phase.

There were five (5) road construction companies in the region qualified to bid on the projects: Avery Ltd, Benson Ltd, Cohen Ltd, Dixon Ltd and Enrique Ltd.

The senior executives of Avery Ltd, Benson Ltd, and Cohen Ltd were long-time friends. They communicated on a regular basis and were determined to keep out smaller start-up companies from competing with them for government contracts. During lunch at a restaurant, the senior executives from Avery Ltd, Benson Ltd and Cohen Ltd agreed verbally that only one company would bid and then the work would be divided amongst the three contractors. Further, they agreed that Avery Ltd would submit a bid for each call. Each bid would not mention Benson Ltd and Cohen Ltd.

Dixon Ltd and Enrique Ltd. were start-up construction companies. Both companies had limited financial resources. Dixon Ltd and Enrique Ltd. decided to submit a bid together for each call for tender. In each bid, it was noted that Dixon Ltd and Enrique Ltd were working together.

The results for each call are summarized below:

Call for tender # 1: Avery Ltd was the successful bidder

Call for tender # 2: Dixon Ltd and Enrique Ltd were the successful bidder.

Call for tender # 3: Avery Ltd was the successful bidder.

The auditor for the Ontario government decided to review the bids as part of a routine audit of all government highway contracts. During the review, the auditor noticed that Benson Ltd and Cohen Ltd did not submit any bids despite the fact that they were known to be established construction companies in the region. Then the auditor received a tip from a former employee of Cohen Ltd about the verbal agreement between Avery Ltd, Benson Ltd, and Cohen Ltd.This former employee also heard the executives from Avery Ltd, Benson Ltd, and Cohen Ltd discuss their plan to "drive Dixon Ltd and Enrique Ltd out of business." As well, a disgruntled former employee from Dixon Ltd alleged Dixon Ltd and Enrique Ltd were "colluding together" in all the calls for tender.

Advise the auditor of the following:

A) Which statute is intended to preserve or promote competition in the marketplace? Is it a federal or provincial statue? Which public body is responsible for investigating of any complaints under this statute? (3 marks)

B)Did Avery Ltd, Benson Ltd and Cohen Ltd take part in anything illegal? Why or why not? (13 marks)

C) Did Dixon Ltd and Enrique Ltd take part in anything illegal? Why or why not? (4 marks)