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Competition Law Compliance: Canada’s Competition Bureau Releases New Draft Immunity and Leniency Programs

May 13, 2018

In today’s enforcement climate, it is critical that businesses adopt and adhere to a competition law compliance policy that accords with the Competition Bureau’s 2015 bulletin on Corporate Compliance Programs.

That’s the message from the Competition Bureau (Bureau), which on May 8, 2018, released a new draft of its Immunity and Leniency Programs (Draft Programs).

The Draft Programs apply to companies that have detected serious Competition Act violations (such as price fixing) and wish to cooperate with the Bureau in resolving them. They clarify the Bureau’s approach to granting immunity from prosecution or leniency in sentencing for parties that cooperate with the Bureau.

The key reasons the Bureau is updating the Draft Programs are to improve its ability to prosecute non-cooperating parties (by requiring early and ongoing disclosure of relevant information), and provide increased financial incentives for parties to cooperate in settling disputes.

Where immunity is granted, a company will avoid conviction and any criminal fines. Immunity is only granted to the first party to come forward and cooperate. A significant change to the “immunity” program relates to the procedural manner in which immunity will be granted. This change is designed to incent ongoing cooperation from parties seeking immunity from prosecution, before final immunity will be granted.

The “leniency” program applies to companies that do not qualify for immunity, because they are not the first to cooperate. Rather, they must plead guilty to an offence, but can still get a reduced fine and other benefits for cooperating. The two most important changes to the leniency program are:

  1. Companies that cooperate later in the process can still get a significant fine reduction of up to 50 per cent, if their cooperation is timely and valuable
  2. If a corporation has a competition law compliance policy, it can receive an additional discount of up to 20 per cent, which can be significant.

According to the Bureau, a competition law compliance policy should have seven elements:

  1. Management commitment and support
  2. Risk‑based corporate compliance assessment
  3. Corporate compliance policies and procedures
  4. Compliance training and communication
  5. Monitoring, verification and reporting mechanisms
  6. Consistent disciplinary procedures and incentives for compliance
  7. Compliance program evaluation

We commend the Bureau for its transparency in releasing the Draft Progams and in particular for recognizing efforts directed at ongoing business compliance. We suspect the Bureau will receive a number of comments from the business community, as well as the Canadian Bar Association on topics such as privilege protection, assessing the fine having regard to the statutory maximum, and the growing concern about the chilling impact of class actions on the efficacy of these programs.

The Bureau has invited interested parties to provide their views on the proposed changes by June 7, 2018 (although we believe this timing may be extended).

Brian Facey, Chair of the Blakes Competition, Antitrust & Foreign Investment group, discussed the Draft Programs at the Canadian Bar Association, National Competition Law Section Spring Conference, held at the Toronto Board of Trade on May 10, 2018, as part of a panel entitled, Immunity and Leniency on the Decline?: Canadian and U.S. Perspectives. The panel also featured the Acting Deputy Commissioner, Cartels Directorate of the Competition Bureau, and the Deputy Chief Federal Prosecutor of the Public Prosecution Service of Canada, each of whom confirmed their involvement in working together to develop the Draft Programs.

If you have any questions regarding these developments, or would like assistance in making a submission to the Bureau, please do not hesitate to contact your usual Blakes contact or any member of the Competition, Antitrust & Foreign Investment group.