COMPETITION LAW COMPLIANCE PROGRAMS
OUR SERVICES
We practice federal competition law, have provided Canadian competition law advice to clients across Canada and internationally and provide a full range of competition law and foreign investment law services including in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act. Our Canadian competition law compliance program services include:
- Preparation of competition law compliance programs.
- Competition law seminars for companies and trade associations.
- Audits and reviews of corporate and trade association activities.
- Competition law educational materials and talks.
- Attending board meetings, conferences and other meetings.
- Criminal search & seizure guidelines for companies and associations.
- General advice on the appliation of the Competition Act.
- Impacts of the recent Competition Act amendments.
OVERVIEW OF COMPETITION LAW COMPLIANCE PROGRAMS IN CANADA
Overview
The Canadian Competition Act (the “Act”) contains both criminal and civil provisions prohibiting a range of anti-competitive activities, many of which can arise in ordinary commercial dealings (e.g., in the context of distributor/customer relations, trade association activities and in relation to many common commercial agreements including IP license agreements, joint venture and strategic alliance agreements and franchise agreements).
Competition Act
The criminal provisions under the Act include provisions relating to criminal conspiracies (i.e., price fixing, market allocation and output restrictions), bid rigging and deceptive marketing and telemarketing. Civil provisions include provisions relating to abuse of dominance, civil misleading representations, refusal to deal, price maintenance and exclusive dealing.
Penalties
The potential penalties for contravention of the Act include fines of up to CDN $25 million (and in some cases without limit – i.e., in the discretion of the court), imprisonment for up to fourteen years and prohibition orders (for contravention of the criminal provisions) and civil fines of up to CDN $10 million (potentially higher on subsequent contraventions or settlement in certain instances) and orders to cease the conduct (in relation to the civil provisions).
Director & Officer Liability
Enforcement under the Act can include both prosecutions of corporate entities and individuals (i.e., employees, officers and directors that violate the provisions of the Act). In some instances, when a corporate entity violates the Act, directors and officers that were in a position to direct or influence the corporation’s policies can be deemed to be parties of the conduct and exposed to potential liability together with the corporation.
In this regard, it is common for employees and directors and officers of companies to be involved both in Competition Bureau (“Bureau”) investigations and to be parties in settlements with the Bureau.
For this reason, it is prudent for boards and senior officers to implement effective and credible competition compliance programs in order to reduce the potential risk of contravening the Act. Implementing such policies can have many benefits, not least of which is reducing the potentially significant penalties in the event of a contravention of the Act (see below).
Compliance Programs
Competition compliance programs are not mandatory under the Act, though can in certain cases be ordered by a court (for example, as part of a negotiated consent agreement or prohibition order). However, a well-designed and effective corporate competition compliance program can have many benefits for companies and trade associations.
Moreover, the importance of a corporate competition compliance policy is greater now than in the past for a number of reasons including: (i) the recent enactment of new criminal conspiracy provisions with lower enforcement burden, (ii) increased penalties for criminal conspiracies, misleading advertising and bid rigging and (iii) criminal conspiracies and deceptive marketing remain top enforcement priorities for the federal Competition Bureau.
Benefits of an Effective Compliance Program
Some of the benefits of a credible and effective competition compliance program include:
- Reducing the risk of contravening the criminal and civil provisions of the Act.
- Identifying the boundaries of acceptable conduct.
- Reducing costs in relation to investigations and proceedings.
- Identifying circumstances when legal advice should be sought.
- Detecting illegal conduct.
- Potentially mitigating penalties in the event of an investigation.
- Strengthening goodwill and reputation.
- Avoiding negative publicity as a result of an investigation or legal proceedings.
- Reducing potential director and officer liability for contravention of the Act.
- Reducing the potential risk and exposure of criminal and civil liability.
While a corporate competition compliance policy will not automatically insulate a company (or its directors and officers) from potential criminal or civil liability under the Act, both the Bureau and the Crown may give weight to a credible and effective compliance program in determining how to proceed in respect of a particular matter.
A credible competition compliance program may also be a mitigating factor in the assessment of penalties under the Act or assessing the availability of certain due diligence defenses.
Recent Competition Bureau Initiatives
The Bureau has recently issued a new Information Bulletin on Corporate Compliance Programs (the “Bulletin”). The Bureau’s new Bulletin replaces its earlier Corporate Compliance Programs Bulletin that was issued in 1997. See: Corporate Compliance Programs.
The Bulletin sets out five elements which, in its view, are essential for corporate competition compliance programs. These are as follows:
1. Senior management involvement and support. As senior management are required to exercise care, skill and diligence and act in the best interests of a company, senior management should indentify the principal risks faced by a business and implement appropriate systems to manage such risk (which includes the adoption of competition compliance programs).
2. Corporate compliance policies and procedures. The development of a corporate compliance program tailored to a business and relevant industry is critical to a program’s success (and also that any compliance program should be periodically updated).
3. Training and education. A credible and effective corporate compliance program should involve ongoing training and education focused on staff that are in a position to potentially engage in conduct that may contravene the Act.
4. Monitoring, auditing and reporting mechanisms. Monitoring, auditing and reporting mechanisms are in the Bureau’s view essential to an effective compliance program and to help prevent and detect conduct that violate the Act.
5. Consistent disciplinary procedures and incentives. Finally, consistent disciplinary procedures and initiatives demonstrate the seriousness of a company’s compliance with the Act and are important not only for deterrence purposes, but also as a reflection of a company’s policy against such conduct.
Trade Associations
With respect to trade associations, the Bureau has in the past several years both maintained its investigation and enforcement of the Act against trade associations. It has as well been working on a number of trade association specific initiatives, including enforcement guidelines tailored specifically to trade association activities. See for example: Competition Bureau – Information Bulletin on Trade Associations (Draft).
The Bureau has also emphasized the particular importance of competition law compliance programs for trade associations:
“A [compliance] program also plays a crucial role for trade associations because trade associations face unique compliance issues. Given that an association provides a forum where competitors collaborate on association activities, trade associations are exposed to greater risks of anti-competitive conduct. A number of past Bureau cases have involved trade associations that were engaged in agreements to harm competition. It is therefore critical that trade associations implement credible and effective programs with strict codes of ethics and conduct. Such programs may allow trade associations and its members to avoid improper actions and to protect themselves from being used as a conduit for illegal activities. They may also allow trade association members to fully benefit from the association’s activities while reducing the potential for inadvertent contraventions of the Acts.” (Competition Bureau, Corporate Compliance Programs Information Bulletin)
COMPETITION LAW COMPLIANCE LINKS AND RESOURCES
CANADA
COMPETITION BUREAU
Enforcement Guidelines and Other Publications
Competitor Collaboration Enforcement Guidelines
Corporate Compliance Programs (Bulletin)
Draft Information Bulletin on Trade Associations
News Releases
“New Laws for Competitor Agreements” (March 12, 2010), available at http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03214.html.
“Competition Bureau Issues Final Competitor Collaboration Guidelines” (December 23, 2009), available at http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/03178.html.
“Competition Bureau Publishes Updated Bulletin on Corporate Compliance Programs” (October 24, 2008), available at http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02731.html.
“Competition Bureau Seeks Comments on Draft Trade Associations Bulletin” (October 24, 2008), available at http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02729.html.
“Competition Bureau Launches New Online Bid-rigging Prevention Tool” (April 8, 2008), available at http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02647.html.
“Information Bulletin on Corporate Compliance Programs Released by the Competition Bureau” (July 10, 1997), available at http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/00678.html.
Articles
Anita Banicevic, “Corporate Compliance Programs Reduce Risk” (March 2009) 28 Lawyers Weekly, No. 41, 7(2).
Antoinette Bozac, “Internal Investigations: Best Practices: A Checklist for In-house Counsel: Managing Competition Bureau Investigations”, paper presented at the Canadian Bar Association, 2006 Annual Fall Conference on Competition Law.
Paul Crampton, “Benchmarking and Other Types of Information Sharing”, paper presented at the Insight conference, Emerging Issues in Competition Law (Toronto, 1994).
Paul Crampton and Lori Cornwall, “Cooperation Between Competitors under the Canadian Competition Act” (1997) 18 Canadian Competition Record No. 2, 54-85.
Jason Gudofsky, “State of the Art Compliance Programs: Objectives and Considerations”, paper presented at the Canadian Bar Association, 2006 Annual Fall Conference on Competition Law.
Mark Katz, Lori Cornwall and Simon Lockie, “Competition Compliance in Canada”, American Bar Association, Section of Antitrust Law, Antitrust Compliance (2005).
John Pecman, Acting Senior Deputy Commissioner of Competition, Criminal Matters Branch, Competition Bureau, “Competition Law and Trade Associations”, Address to the 2008 Property & Casualty Industry Insurance Forum, Northwind Professional Institute (Cambridge, Ontario, may 23, 2008).
Ronald Stern, “Antitrust Compliance Programs: A Corporate Counsel’s View”, paper presented at insight conference, Emerging Issues in Competition Law (Toronto, 1994).
Steve Szentesi, “Being Ready for the Competition Bureau from an Association Perspective”, paper presented at Canadian Bar Association, Competition Law Section, Annual Fall Competition Law Conference (Gatineau, 2002).
Michael L. Weiner, “Benchmarking, Information Sharing and Facilitating Practices: Distinguishing the Legitimate from the Unlawful”, paper presented at the insight conference, Emerging Issues in Competition Law (Toronto, 1994).
UNITED STATES
American Bar Association, Section of Antitrust Law, Compliance & Ethics Committee: http://www.abanet.org/dch/committee.cfm?com=AT310250.
Department of Justice
United States, Department of Justice, Antitrust Division (http://www.justice.gov/atr/).
United States Federal Trade Commission and U.S. Department of Justice, Antitrust Guidelines for Collaborations among Competitors (April, 2000), available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf.
United States Federal Trade Commission, FTC Guide to the Antitrust Laws, “Dealings with Competitors”, available at: http://www.ftc.gov/bc/antitrust/dealings_with_competitors.shtm.
Federal Trade Commission
United States, Federal Trade Commission (http://www.ftc.gov/).
Books and Articles
Books
American Bar Association (Chicago), Section of Antitrust Law, An Antitrust Guide For Trade Association Professionals and Members (American Bar Association, 2004).
American Bar Association, Section of Antitrust Law, Antitrust and Associations Handbook (American Bar Association, March, 2009).
American Bar Association, Section of Antitrust Law, Antitrust Compliance: Perspectives and Resources for Corporate Counselors (American Bar Association, 2005).
American Bar Association, Section of Antitrust Law, A Primer on the Law of Information Exchange, 2nd ed. (American Bar Association, 2002).
Theodore L. Bank and Frederick Z. Banks, eds., Corporate Legal Compliance Handbook (Aspen Publishers, 2005).
William M. Hannay, Designing an Effective Antitrust Compliance Program, 11 Corporate Compliance Series (Thompson/West, 2009).
Jerald A. Jacobs, Association Law Handbook (ASAE & The Center for Association Leadership, 2007).
Articles
Donald I. Baker and Mary J. Houle, “Using the Results of an Antitrust Audit to Educate the Corporate Team”, 59 Antitrust L.J. 971 (1990-1991).
Competition Economists Group, “Evaluating the Competitive Harm of Information Exchange” (May, 2009).
John F. Fatino, “Corporate Compliance Programs: an Approach to Avoid or Minimize Criminal and Civil Liability”, 51 Drake L. Rev. 81 (2002).
John P. Halfpenny, “An Ounce of Prevention: Enacting Safeguards to Ensure that Corporate Employees Do Not Unwittingly Violate the Antitrust Laws”, 1/02 Metro. Couns. 15 (2002).
Kimberly L. King, “Antitrust Primer for Trade Associations”, Florida Bar Journal, Vol. 75, Issue 5 (May 2001).
William J. Kolasky, Deputy Assistant Attorney General, U.S. Department of Justice, Antitrust Division, “Antitrust Compliance Programs: The Government Perspective”, Address before the Corporate Compliance 2002 Conference Practicing Law Institute, San Francisco, California (July 12, 2002), available at http://www.justice.gov/atr/public/speeches/224389.htm.
Michele Lee, “Building an Effective Antitrust Compliance Program: International and Cultural Exchanges”, Antitrust Compliance Bulletin (March, 2006).
Barry J. Lipson, “Adopting an Effective Antitrust Compliance Program”, 3 No. 16 Lawyers J. 5 (August 10, 2001).
James Loftis, “That Ever-So Fine Line Between Inference and Agreement”, paper presented at the American Bar Association Section of Antitrust Law, the Antitrust Masters Course, September 30, 2004, Greensboro, GA).
Joseph E. Murphy, “Surviving the Antitrust Compliance Audit”, 59 Antitrust Law Journal 953 (1991).
Terrence T. Murphy, “The New Standard for Compliance and Corporate Ethics Training: Leveraging the Power of the Internet to Deploy an Effective Program”, 6/02 Metro. Corp. Couns. 40 (2002).
Harvey I. Saferstein and John Anthony Chavez, “The Practical Aspects of Corporate Antitrust Compliance Programs”, 1291 PLI/Corp. 659 (2002).
EUROPE
OFT (UK)
Office of Fair Trading, Report, Drivers of Compliance and Non-compliance with Competition Law (May, 2010), available at http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft1227.pdf.
Office of Fair Trading, How Your Business Can Achieve Compliance: A Guide to Achieving Compliance With Competition Law (March, 2005), available at http://www.oft.gov.uk/shared_oft/business_leaflets/ca98_mini_guides/oft424.pdf.
Office of Fair Trading, Trade Associations, Professions and Self-regulating Bodies: Understanding Competition Law (Office of Fair Trading, 2004), available at http://www.oft.gov.uk/shared_oft/business_leaflets/ca98_guidelines/oft408.pdf.
Articles
Philip Collins, Chairman, Office of Fair Trading, “Compliance: a Key Role for Trade Associations in Helping Business Understand and Meet their Legal Obligations”, Speech to the Trade Association Forum Annual Conference (March 4, 2010), available at http://www.oft.gov.uk/shared_oft/speeches/689752/spe0210.pdf.
Kiran S. Desai, “Antitrust Compliance: The Effects of Perceived Regulatory Failure”, The European Antitrust Review, 2010 (Global Competition Review, 2010).
Diran S. Desai, “Antitrust Compliance Programs”, European Antitrust Review, 2005.
Andreas Stephen, “Hear no Evil, See no Evil: Why Antitrust Compliance Programs may be Ineffective at Preventing Cartels”, CCP Working Paper 09-09, ESRC Centre for Competition Policy & Norwich Law School, University of East Anglia.
AUSTRALIA
Australian Competition & Consumer Commission, Cartels: Deterrence and Detection Guide (April 16, 2009), available at http://www.accc.gov.au/content/index.phtml/itemId/869010.
Australian Competition & Consumer Commission, Cartels: What You Need to Know: A Guide For Business (October 15, 2009), available at http://www.accc.gov.au/content/index.phtml/itemId/897448.
Australian Competition & Consumer Commission, Guidelines for Developing Effective Voluntary Industry Codes of Conduct (March 4, 2005), available at http://www.accc.gov.au/content/index.phtml/itemId/658186.
CANADIAN COMPETITION LAW LINKS
For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.
CONTACT US
We provide Canadian competition law and consulting services to Canadian and international clients. For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558. Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.