March 6, 2017
I receive quite a few inquiries about how the Competition Bureau (Bureau) works, what kinds of claims can be made under the Competition Act and how to report potential competition law violations to the Bureau (and what remedies are available). One topic I find I am increasingly discussing with both potential clients and other counsel is whistleblowing. So I thought I would post a short summary of whistleblowing and the Competition Act.
Key Points About Whistleblowing and the Competition Act
Does the Competition Act have whistleblowing provisions?
Yes.
They are set out in sections 66.1 and 66.2 of the Competition Act. These sections were enacted in 1999 but have not, until recently, received much attention. This has been changing since, among other things, the Bureau’s Whistleblowing Initiative launched in 2013.
What do they do?
The whistleblowing sections: (i) protect the identities of people who report Competition Act violations to the Bureau (section 66.1); and (ii) prohibit employers form retaliating against employees (including independent contractors) who, in good faith and on the basis of reasonable belief, report potential competition law offences to the Bureau (section 66.2).
The Criminal Code contains similar employee protection provisions for reporting federal or provincial offences (section 425.1). The maximum penalty for violating the Code’s whistleblower offence is imprisonment for up to five years.
What is the Bureau’s confidentiality policy for whistleblowers?
The Bureau’s confidentiality policy for whistleblowers is set out in its Information Bulletin on the Communication of Confidential Information Under the Competition Act:
“Under section 66.1 of the Act (commonly referred to as the whistleblowing provision), anyone who has reasonable grounds to believe that a person has committed or intends to commit a criminal offence under the Act may notify the Bureau of the particulars of the matter and may request that his or her identity be kept confidential. The Bureau will keep confidential the identity of a person who has made such disclosure and to whom an assurance of confidentiality has been provided.
When a person has accepted such an assurance, his or her identity and any information that could reveal his or her identity is confidential and cannot be communicated under section 29 of the Act without the consent of that person.
Information provided by a whistleblower, other than his or her identity and any information that could reveal his or her identity, may be communicated under section 29 of the Act in the four limited circumstances set out in section 3.2 of this Bulletin. Where information provided by a whistleblower is communicated in such circumstances, the Bureau will make every effort to ensure that the communicated information does not disclose the identity of the whistleblower or any other information that could reveal his or her identity.”
Is whistleblowing mandatory for directors, officers or other personnel?
No.
Whistleblowing under the Competition Act is voluntary. This is in contrast to, for example, other legislation, such as the federal Financial Administration Act, which imposes positive reporting obligations on federal employees. See Public servants who turn a blind eye to wrongful activities will be held accountable.
If a director, officer or employee does not report a competition law violation can they be at risk?
Yes.
However, individual liability does not turn on whether or not an individual reports a competition law violation, but rather whether (and the extent to which) they were involved in the illegal activity. For example, an individual may be liable for a competition law offence where they were either a party to the offence (e.g., party to a price-fixing or other conspiracy agreement) or aided or abetted an offence (e.g., assisted with the formation of a conspiracy agreement).
What happens if a company retaliates against a whistleblower?
Under section 66.2 of the Competition Act, companies are prohibited from retaliating against a whistleblower.
More specifically, an employer cannot dismiss, suspend, demote, discipline, harass or otherwise disadvantage an employee that in good faith and on reasonable belief reports a Competition Act offence (or does anything else listed under section 66.2, including refusing to participate in an offence).
Are financial rewards available to whistleblowers?
No.
Unlike, for example, the Ontario Securities Commission’s Whistleblower Program, where tipsters are eligible to receive up to $5 million, there are no financial incentives offered to whistleblowers under the Competition Act.
The absence of financial rewards may have discouraged competition law whistleblowers from actively reporting potential violations to date. However, given the Bureau’s continued interest in enforcing the criminal provisions of the Competition Act, as well as its recent focus on public procurement (see, for example, Competition Bureau ups bid-rigging work to protect federal infrastructure cash), it will be interesting to see whether it follows the OSC’s lead in offering financial rewards to personnel that report competition law violations. This may well be one practical way to enhance the Bureau’s criminal enforcement.
What is the Competition Bureau’s position on whistleblowers?
The Bureau encourages whistleblowers to report potential Competition Act violations. In this regard, in 2013 the Bureau launched a “Whistleblower Initiative” to highlight the whistleblowing sections of the Competition Act and encourage reporting of potential competition law offences.
The Bureau’s initiative did not, however, create a new regime – it was an effort by the Bureau to highlight existing Competition Act protections for whistleblowers.
In announcing the Bureau’s new Whistleblower Initiative, the Commissioner of Competition said:
“This initiative is a way for members of the public to provide information to the Bureau regarding possible violations of the criminal cartel provisions of the Act. Anyone who has reasonable grounds to believe that a person has committed, or intends to commit, a criminal offence under the Act, may notify the Bureau of the particulars of the matter and may request that his or her identity be kept confidential. The Bureau will keep confidential the identity of a person who has made such disclosure and to whom an assurance of confidentiality has been provided. The Bureau will also ensure that any information provided by a whistleblower that is communicated to other law enforcement agencies does not reveal the identity of the whistleblower. We believe that this initiative will support increased reporting of anti-competitive behaviour, while ensuring the protection of individuals who come forward with such information.”
Should whistleblowing be part of an organization’s competition law compliance program?
Yes.
The Bureau’s position in its Corporate Compliance Programs Bulletin, which sets out the Bureau’s policies relating to effective and credible competition compliance programs, is that an effective compliance program should include information about the Competition Act’s whistleblowing protections:
“While an internal reporting mechanism is important, there may be situations where the use of an external reporting mechanism would be more appropriate. A program should also educate employees who are in a position to engage in, or be exposed to, conduct in potential breach of the Acts on the Bureau’s Immunity Program and the whistleblowing provisions (sections 66.1 and 66.2 of the Competition Act.”
Are there other ways to report competition law violations?
Yes.
There are several different ways to report competition law violations to the Bureau. These include filing a complaint with the Bureau or applying for immunity or leniency under the Bureau’s Immunity or Leniency Programs.
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