Changes to Bureau Enforcement Policies Signal New Aggressive Stance

Canada’s Competition Bureau (Bureau) today announced substantial revisions to their immunity and leniency policies’ FAQs.  While the fundamental features of the programs do not change, new elements have been added signalling a more aggressive enforcement approach that could influence the decision to seek immunity or leniency in Canada.

Immunity FAQs

As with other antitrust regulators, Canada has maintained an immunity policy offering amnesty for first-in applicants disclosing antitrust conspiracy offences since 2000. The program has been tremendously successful in generating inquiry leads and a series of successful resolutions of cartel cases.  This most recent revision of the FAQs represents a substantial “tuning-up” of enforcement policies, aimed at ensuring that Canada will be among the more top-of-mind agencies for global cartel enforcement.  The most notable features of these revisions are as follows:

  • Prosecution for both direct and indirect cartelized sales into Canada. This is consistent with the Bureau’s view that parties involved in cartels having only indirect sales into Canada are subject to prosecution and thus should apply for immunity under the policy;
  • A marker is now available for “aiding or abetting” competition offences. Only a single marker will be granted for each offence (whether that marker is for a substantive offence or “aiding/abetting”);
  • No markers for offences of obstruction or destruction of records;
  • There is a new and more aggressive approach to making follow-up proffers and ensuring complete cooperation by applicants:
    • The Bureau will not disclose the applicant’s identity to other enforcement agencies but will expect an “immediate” waiver permitting both substantive and procedural communications with other agencies where the applicant has made similar applications in other jurisdictions;
    • Markers will lapse after a 30-day period if the applicant fails to provide its proffer and the Bureau will not notify an applicant pending the expiry date;
    • Applicants unable to meet the 30-day proffer deadline must be prepared to offer information on the status of internal investigations and a work plan for completing the proffer;
    • The Bureau will not accept delays because of complications arising in other jurisdictions or because counsel may not be available;
    • All proffers are made on a “without prejudice” basis but the applicant is required to outline all supporting evidence and witnesses that it can provide by way of cooperation such that the Bureau will have “a clear appreciation of the evidence each witness...can provide”;
    • The proffer should also include specifics of any evidence, destruction or attempts to obstruct the investigation; significant departures from this policy will result in automatic lapsing of the immunity marker;
    • If the applicant’s proffer does not sufficiently disclose an offence the Bureau may request the applicant withdraw its marker or may cancel it following a 14 -day notice period;
    • The Bureau will typically require full disclosure within a 6-month timeline; violations of this may be considered to be a breach of the immunity agreement;
    • As to cooperation of current and former employees, corporate applicants are required to take “all lawful measures” to secure such cooperation, which may extend to agents or former directors, officers or employees covered by the agreement; generally, witnesses must travel to Canada for Bureau interviews;
    • Witness interviews may be requested before finalization of the immunity agreement; if the witness refuses to provide cooperation, the Bureau may recommend that that witness be “carved out” from the agreement and face prosecution;
    • Applicants must  provide information updates to the Bureau;
    • As to disclosure of previous offences, the revised policy requires disclosure of criminal offences under the Competition Act of which the applicant is aware and each applicant will be expected to exercise reasonable due diligence in determining such issues; disclosure of criminal offences affecting the credibility of individual witnesses is also expected;
    • Significantly, the disclosure process is said to be conducted on a “without prejudice” basis and neither the Bureau nor the Public Prosecution Service will use the information against the applicant or its individuals, unless there is a failure to comply with terms and conditions of the immunity agreement;
    • Offences uncovered after the signing of an immunity agreement are to be brought to the Bureau’s attention; where late disclosure is made, the Bureau may recommend increased penalties;
    • An immunity applicant is required to give notice to the Bureau of any required public disclosure and must also disclose third parties to whom its application has been disclosed; violations of this policy may lead to expulsion from the immunity program;
    • Applicants are also required to keep the Bureau apprised of the general status of any civil proceedings and notify the Bureau of its intention to cooperate with civil litigants;
    • As to joint defence arrangements, the Bureau states that these must be subordinate to the applicant’s commitment under the immunity program;
  • Applicants should consult with the Bureau about possible inadvertent disclosure of the immunity application or other concerns about confidentiality;
  • Coercive disqualifying conduct (which may be express or implied) is defined as requiring “clear evidence” and that the party “pressured unwilling participants to be involved in the offence”;
  • In circumstances where an applicant may be eligible for “immunity plus” (in an non-immunity situation for one product but immunity on another) the Bureau will typically recommend an additional 5-10% on top of its leniency discount for the non-immunized product (typically 50%) based on a number of indicated factors;
  • The Bureau will support sealing orders to keep identities and other details of the applicant confidential, unless a court orders otherwise;
  • The Bureau will not commence civil proceedings against an applicant on substantially the same facts forming the basis for the immunity application.

Leniency Program FAQs

The Bureau’s leniency program was initiated in 2010 and applies to parties that have not sought or obtained immunity in relation to the particular product or service under inquiry.  As second-in or later entities, leniency applicants accepted under this program are expected to plead guilty under a formal plea agreement and file admissions as to facts.  Many of the revisions to the Leniency Policy FAQs are identical to the Immunity provisions, including time limit restrictions and possible extensions, disclosure and co-operation arrangements, and the types of information that will be required.  Leniency applicants can apply whether they have direct or indirect sales into Canada. 

Significant leniency policy changes are:

  • Potential legal defences must be raised with the Bureau as soon as possible in order that the Bureau may assess its position; if the Bureau nevertheless concludes that an offence has been established, it is for the applicant to decide whether or not to pursue its leniency application;
  • As with the immunity program, all disclosures to the Bureau are said to be on a “without prejudice” basis;
  • As to fine calculation, the FAQs explain the Bureau’s “20% of commerce” proxy fine calculation guideline and indicate that discounts up to 50% (first-in applicant) may be given to applicants;
  • Where the 20% commerce figure is greater than the statutory maximum ($25,000,000) the Bureau will adopt the maximum fine as a starting point;
  • In the case of market allocation agreements where there is no commerce in Canada, fine calculations will be made on a case-by-case basis and the Bureau will consider volumes of commerce covered by any relevant agreement or arrangement; sales to Canada will not be a governing feature;
  • For bid-rigging cases, fines will be calculated on the basis of the total volume of commerce covered by relevant agreements or arrangements;
  • Where indirect sales are concerned, the Bureau will “work with” an applicant to develop a methodology to estimate affected volumes of commerce and may limit their calculation to the value of the relevant input into the end product;
  • In cases where penalties are imposed in other jurisdictions, the Bureau may consider on a case-by-case basis whether penalties imposed elsewhere are adequate to address Canadian economic harm;
  • If an applicant has evidence that an overcharge was less than the Bureau’s 20% proxy figure, the Bureau will consider such “readily accessible, compelling and evidence not requiring modelling” in its calculations;
  • As to charges for individuals, first-in leniency applicants will receive a complete exemption, while second-in and subsequent applicants will be considered on a case-by-case basis, based on a variety of factors;
  • The Bureau makes clear that non-prosecution arrangements “...are not available” under the leniency program;
  • Where an applicant is unable to pay a fine, the Bureau states that it will “critically assess” any evidence as to inability provided by the applicant; such evidence must be complete and explicit and may involve the Bureau’s using an independent third-party expert to review such evidence;
  • After entering into a plea agreement, the applicant is subject to the same full and complete disclosure requirements as under the immunity program;
  • As with the immunity program, non-cooperating witnesses may be subject to carve-out from the plea agreement and face prosecution;
  • A plea agreement may be revoked where an applicant has not met the agreement’s terms, although such revocation is made subject to a 14-day notice provision, in order to enable the applicant to remedy its failure;
  • Unless there are “compelling reasons”, the Bureau will not recommend any delay in filing an indictment; specifically, delays will not be accepted because the party does not want to be the first-in-line to plead guilty;
  • As with the immunity policy, similar considerations will apply on issues of confidentiality in relation to other agencies, potential reporting requirements in other jurisdictions, and arrangements for cooperation to civil plaintiffs.

These changes to the FAQs represent an enhanced enforcement posture by the Bureau, with a clear indication of higher expectations for both immunity and leniency applicants for early cooperation and ongoing disclosure. As well, the Bureau indicates that it will seek to enforce its prosecution policy in cases where there may only be indirect sales to Canada, or for market allocation or bid-rigging agreements where the applicant may have no commerce in Canada.  These changes highlight the need for parties contemplating seeking immunity or leniency in Canada to seek the advice of expert counsel familiar with Bureau and Public Prosecution Service of Canada prosecution policies.