MAJOR COMPETITION LAW COMPLIANCE UPDATE: On June 3, 2015, the Competition Bureau (Bureau) finalized its new core competition law compliance materials. The Bureau’s new compliance materials, which include information on most major competition law areas, misleading advertising, associations and the Bureau’s Leniency Program, are essential reading for corporate compliance officers, senior management and in-house and general counsel. For an overview of the developments (with links) see: Canadian Competition Law Compliance Programs.
The Competition Act (Act) is enforced and administered by the Competition Bureau (Bureau), a federal enforcement agency headed by the Commissioner of Competition (Commissioner). The Bureau investigates potential competition law offences and civil “reviewable matters” under the Competition Act based on its own investigations, as well as based on complaints from consumers, competitors and other marketplace participants.
The Bureau has significant powers to investigate potential violations of the Act, which include the ability to obtain court orders to search premises and seize documents, search and seize computer records, tap phone lines, compel individuals to testify under oath or require companies or individuals to produce documents or responses to written information requests.
CIVIL MATTERS & CRIMINAL OFFENCES
The Commissioner has the power to investigate and refer criminal matters under the Act to the Director of Public Prosecutions (DPP) for prosecution. These include conspiracy (price-fixing, market allocation/division and supply/output restriction agreements between competitors), bid-rigging, misleading advertising in some cases, deceptive telemarketing and pyramid selling.
While the Bureau investigates potential violations of the Act’s criminal offences, the responsibility for prosecutions lies with the DPP. In practice, however, the Bureau and the Public Prosecution Service work closely together on criminal competition matters.
The Commissioner is also responsible for investigating and initiating applications relating to potential violations of the Act’s civil “reviewable matters” sections, which are primarily adjudicated before the federal Competition Tribunal (Tribunal), which is a specialized administrative body consisting of judges and “lay” experts. Civil reviewable matters under the Act include the civil misleading advertising, refusal to deal, price maintenance, abuse of dominance and exclusive dealing / tied selling / market restriction sections.
COMMENCEMENT OF COMPETITION
Proceedings may be commenced under the Act by the Bureau itself based on its own investigations or as a result of complaints from customers, competitors or other industry participants. In many criminal cases, the Bureau commences investigations as a result of parties applying for immunity or leniency under the Bureau’s formal Immunity or Leniency Programs.
In addition to Bureau investigations, private parties may also in some cases commence private actions for violations of the criminal sections of the Act (typically under the criminal conspiracy section) or commence “private access” applications before the Tribunal for orders under the refusal to deal, price maintenance or exclusive dealing / tied selling / market restriction sections.
Violation of the Act can result in significant penalties, lost time and negative publicity for individuals, companies, other types of organizations and their executives and personnel.
Potential penalties include criminal fines, civil “administrative monetary penalties” or “AMPs” (essentially civil fines), imprisonment, damages (or settlements) arising from private civil actions and court orders (injunctions or prohibition orders) to stop or modify conduct.
Some specific penalties under the Act include criminal fines of up to $25 million (under the criminal conspiracy provisions), civil fines of up to $10 million (for abuse of dominance and civil misleading advertising) and imprisonment for up to 14 years.
There is also potential director and officer liability under the Act. In this regard, the Bureau commonly pursues individual executives as accused in criminal matters and plaintiffs frequently name directors and officers as defendants in civil actions commenced under the Act.
Private parties (e.g., consumers or competitors) can also commence private actions for damages where they have suffered actual damage or loss as a result of a violation of the criminal provisions of the Act (or as a result of the breach of a Tribunal or court order made under the Act).
Class actions may also be commenced under the Act and are increasingly common (and are expected to increase following plaintiff-favourable Supreme Court decisions in 2013 allowing indirect purchaser class actions to proceed.
COMPETITION BUREAU SEARCHES
The Bureau’s enforcement powers include the ability to obtain search warrants. The Act also includes obstruction provisions, which make it a criminal offence to impede or prevent (or attempt to impede or prevent) inquiries or examinations under the Act.
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