According to lawyers who have read the Competition Bureau report, the Ontario regulator wants GFL Constructors and Terrapure Environmental to divest the project.
Even though it is a public company, experts have suggested the Competition Bureau would be cautious about taking significant action against GFL.
“Usually, you deal with the company that’s the supplier, not the buyer,” noted Andrew Clarke, a competition lawyer who specializes in government and public procurement at Lerners LLP.
The report, dated March 7, 2018, is relatively short, according to Vijay Singh Thakkar, a former deputy to the deputy minister of the ministry of finance.
Thakkar, who also advised the Competition Bureau in its review of the Morgan Stanley and Greenlaw merger, says the review gave him hope that the regulator is moving beyond its focus on monopolies and into broader public interest considerations such as productivity and cost savings.
“It suggests the Competition Bureau has been thinking of the public interest more broadly and embracing the broad impact of this merger across various government departments.”
A spokeswoman for GFL Constructors, which is the current partner of GGL Construction, declined to comment, deferring to its law firm. A spokesman for Terrapure Environmental, which is the current partner of GFL Environmental, was not immediately available for comment.
A spokesman for the Competition Bureau declined to comment on the specific case. The Ontario Ministry of Finance referred questions about the merits of the case to the competition regulator.
Government contract disputes are rare. While GFL has a wide range of government contracts, the companies specialize in infrastructure and have been involved in a number of high-profile infrastructure projects in Canada.
Over the past year, GFL began developing rail infrastructure in Surrey, British Columbia, and also built the body of a bridge in Grand Falls-Windsor, Newfoundland and Labrador.
Terrapure Environmental was involved in the building of bridges in Saskatchewan.
Canada’s largest public auction of construction work to provinces and territories is conducted by the CBC. According to this series, GFL is the exclusive general contractor to Ontario’s provincial government. The Trudeau government had announced that it would halt the CBC auction and that GFL would have to compete with several other contractors for the work.
While the agreement between GFL and Terrapure Environmental is not a monopolistic agreement, it does involve a handful of large civil engineering companies, including CGI, which is the current partner of GFL in the CBC auction. This group is also currently engaged in competing against a larger consortium of professional services firms, including Grant Thornton and PricewaterhouseCoopers, for contract with the Grand Falls-Windsor bridge project.
Michael Odell, a Vancouver-based competition lawyer who works on large government procurement matters and represents some of these organizations, says that there are likely legal obstacles that could delay a decision by the Competition Bureau. He also suggested that the jurisdiction of the Competition Bureau has become more complicated and that the province might choose to pursue options other than completing the bidding process and potential conflict that would result from a new competition.
Even so, Odell has said he believes the Competition Bureau will move to complete the case if it hasn’t already.
“The bureau does not conduct this kind of investigation lightly,” he has said.
A second contractor, Beech Ridge Infrastructure, is currently participating in the CBC process for the Rail Corridor Phase 2 contract awarded by the federal government in 2015. A spokesman for the federal government said that the group is vying for the contract with GFL.
GFL and Terrapure Environmental have been at the center of competitive bidding disputes in several projects, including several infrastructure projects.
In one complaint to the Federal Court, GFL Constructors, through a professional services consortium, is challenging another construction contractor, Evans & Sutherland, for being responsible for delays in getting an Ontario portion of an Ottawa light rail transit project up and running. The project is also the subject of a parallel judicial review filed by GFL in Ontario Superior Court.
GFL said in a statement it believes the Competition Bureau’s decision to initiate an investigation will have no impact on its ability to engage in international bidding engagements and that “we remain confident that we can win any future valid government bidders/bid scoping process.”