Canadian COMPETITION LAW

November 21, 2016

Practical Law Canada Competition has published a new Legal Update providing practice tips for counsel advising clients in the Competition Bureau’s Immunity Program. Below is an excerpt with a link to the full Update.

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This Legal Update provides practice tips for counsel advising applicants in the Competition Bureau’s (Bureau) Immunity Program during the marker and proffer process. In particular, it includes a concise summary of the Bureau’s Immunity Program, focusing on the marker and proffer steps, critical timing issues and guidelines to protect an immunity applicant client’s interests. Also included are links to related Practical Law Canada Competition and Bureau resources.

Practical Law Canada Competition

The Competition Bureau (Bureau) has formal Immunity and Leniency Programs that can be very important to companies or individuals that have committed criminal offences under the Competition Act, R.S.C. 1985, c. C-34 (Competition Act) to reduce liability. For more information, see Practice Note, Competition Bureau Immunity and Leniency Programs.

In general, these Programs, which are the Bureau’s leading detection and enforcement tools in the criminal competition law area, offer full immunity from prosecution or leniency in sentencing for parties that report offences to the Bureau and cooperate in an investigation. For more information, see Practice Notes, Competition Act Search and Seizures, Competition Bureau Investigations and Criminal Competition Law Enforcement. For a recent summary of the Bureau’s criminal enforcement, see Legal Update, Criminal Competition Law Enforcement: Recent Competition Bureau and Case Developments.

The Bureau’s Immunity Program is available in relation to the criminal offences of the Competition Act, including conspiracy agreements (section 45, Competition Act), foreign directed conspiracies (section 46) and bid-rigging (section 47). It is also available in relation to the criminal false or misleading representations and deceptive marketing practices provisions (sections 52 through 55.1). The Bureau’s Leniency Program is narrower and only available in relation to cartel-related offences (that is, sections 45 to 49, including conspiracy and bid-rigging). For more information, see Practice Notes, Canadian Conspiracy (Cartel) Law, Canadian Bid-Rigging Law and Misleading Advertising Under the Competition Act.

Importantly, immunity is only available to the first applicant that successfully fulfills all of the requirements of the Bureau’s Immunity Program. While several applicants may receive leniency in sentencing under the Bureau’s Leniency Program, reduced protections are available for second and subsequent leniency applicants. As such, there are strong incentives to seek full immunity as quickly as possible or, where unavailable, attempt to secure first place in the Bureau’s Leniency Program.

To be eligible under the Bureau’s Immunity Program, an applicant must be the first to disclose the conduct (obtaining immunity is a race), and the Bureau is either unaware of the offence or aware of it but does not yet have sufficient evidence to refer the matter to the Public Prosecution Service of Canada (PPSC) for prosecution.

An immunity applicant must also:

1. Terminate its participation in the illegal activity. This may include, depending on the offence, not attending meetings with other parties, ending communications with parties or not discussing the terms of bids in advance of a tender.

2. Not have coerced others to be a party to the offence. The Bureau’s policy is to only disqualify a party where there is clear evidence of coercive behaviour (that is, pressured unwilling participants to be involved).

3. Provide complete, timely and ongoing co-operation during an investigation at its own expense.

This means an immunity applicant must:

1. Disclose any Competition Act offences in which they have been involved.

2. Disclose all non-privileged information, evidence and records in its possession, under its control or available to them relating to the offence for which immunity is sought.

3. Take all lawful measures to secure the co-operation of current directors, officers and employees (and former directors, officers and employees where it would not jeopardize the investigation with the consent of the Bureau or Director of Public Prosecutions).

4. Co-operate with the Bureau’s investigation and any subsequent prosecution at their own expense. For more information on these requirements, see Practice Note, Competition Bureau Immunity and Leniency Programs, Bulletin, Immunity Program under the Competition Act, Competition Bureau, June 7, 2010 (Immunity Bulletin) and Immunity Program: Frequently Asked Questions, Competition Bureau, 2015 (Immunity Program FAQs).

Obtaining immunity under the Bureau’s Immunity Program involves the following steps: seeking a marker, making a proffer to the Bureau, entering into an immunity agreement and full disclosure and co-operation with the Bureau’s investigation and any subsequent prosecution.

During the above process, the marker and proffer steps are critical, because the immunity process is a “race” (that is, only available to the first applicant to fulfill all of the Immunity Program’s requirements) and meeting them can result in the Bureau making an immunity recommendation to the PPSC.

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For the full Legal Update, see: The Competition Bureau’s Immunity Program: Practice Tips for the Marker and Proffer Stages.

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