Categories

Archives


IMMUNITY & LENIENCY

“It has been recognised for centuries that the practice of allowing one co-defendant to ‘turn Queen’s evidence’ and obtain an immunity from further process by giving evidence against another was a powerful weapon for bringing criminals to justice, and although this practice ‘has been distasteful for at least 300 years to judges, lawyers and members of the public’, and although it brings with it an obvious risk that the defendant will give false evidence under this ‘most powerful inducement’, the same very experienced court which so stigmatised this practice was willing to accept that it was in accordance with the law.”

(Lord Mustill, Chan Wai Keung v. The Queen,
[1995] 2 All ER 438 at 444)

____________________

“The Competition Bureau’s goal in creating and maintaining its Immunity Program is to uncover and stop criminal anti–competitive activity prohibited by the Competition Act and to deter others from engaging in similar behaviour. Immunity is an extraordinary grant by the Crown to forego prosecution and a no less formidable commitment by the applicant to address illegal wrongdoing and to fully support the Competition Bureau and the Crown in investigating and prosecuting others implicated in the illegal activity. Predictability and transparency in Bureau policy and practice ensures that an applicant appreciates the nature of immunity.

This Program has proven to be the Bureau’s single most powerful means of detecting criminal activity. Its contribution to effective enforcement is unmatched. Its continued appeal to those who would otherwise remain undercover is pivotal to our enforcement efforts. Regular reviews and adjustments are essential to ensure that the Program keeps pace with changes that affect its ability to continue delivering significant value to the Bureau in terms of detection, investigation and prosecution of criminalbehaviour.”

(Competition Bureau, Immunity Program Bulletin)

____________________

OVERVIEW

Recent Developments: New Competition Bureau anti-cartel compliance materials including: compliance video, Competitor Collaboration Pamphlet, updated Bid-Rigging Pamphlet and Trade Associations Pamphlet – see: here.

__________________

The Competition Bureau (the “Bureau”) has formal Immunity and Leniency Programs under which applicants are eligible to receive full immunity from prosecution (or reduced penalties) for cooperating with a Bureau investigation.

Under the Bureau’s Immunity Program, a party or company implicated in criminal conduct under the Competition Act (the “Act”) may offer to cooperate with the Bureau in its investigation and request immunity (i.e., full immunity from prosecution for criminal offences under the Act).

The criminal provisions of the Act include sections 45 (price-fixing, market allocation/division and output/supply restriction agreements between competitors) and 47 (bid-rigging agreements).

In general, in order to be eligible under the Bureau’s Immunity Program, the Bureau must either (i) be unaware of an offence (and the immunity applicant is the first to disclose it) or (ii) the Bureau is aware of the offence but does not yet have enough evidence to refer the matter for prosecution.

There are a number of other requirements including: (i) termination of participation in the illegal activity, (ii) not being the “ringleader” (i.e., not having coerced others to be a party to the illegal activity) and (iii) providing “complete, timely and ongoing co-operation” with the Bureau during an investigation (including confidentiality obligations, disclosing any other offences and securing the co-operation of current directors and officers).

Generally speaking the process for obtaining immunity is a multi-step process that involves: (i) seeking a “marker” from the Bureau (essentially a place in line, typically made on a hypothetical basis), (ii) making an initial “proffer” of information to determine eligibility in the Program (typically made by an applicant’s counsel on a without prejudice basis), (iii) the negotiation of an immunity agreement (setting out the obligations of the immunity applicant and protections if the requirements of the Program are met) and (iv) disclosure and cooperation with the Bureau in the investigation and any resulting criminal prosecution.

Importantly, immunity under the Act is a “race” in that full immunity is only available to the first applicant that complies with the Bureau’s requirements under its Immunity Program.  As such, it is important for counsel advising individuals or companies that may have been involved in criminal conduct under the Act to immediately explore the potential benefits of seeking immunity, which can significantly reduce liability.

The Bureau has also issued guidelines that describe the requirements for immunity applicants (see: Immunity Program under the Competition Act (Bulletin)).

LENIENCY PROGRAM

Under the Bureau’s Leniency Program, parties that have contravened criminal provisions of the Act that are not entitled to full immunity may nevertheless qualify for leniency under the Bureau’s Leniency Program.

In general, in order to be eligible under the Bureau’s Leniency Program, an applicant must: (i) have terminated its participation in the illegal conduct, (ii) provide full, frank, timely and truthful cooperation with the Bureau in its investigation and (iii) agreed to plead guilty (not required under the Bureau’s Immunity Program).

Importantly, as like the Bureau’s Immunity Program, timing is important for immunity applicants because the first leniency applicant is eligible to receive a 50% reduction of the fine that would have otherwise been recommended, the second leniency applicant is entitled to receive a 30% reduction in fine with subsequent applicants possibly receiving reductions in fines.  Once the Bureau has referred a matter for prosecution, leniency will no longer be available to prospective applicants.

Generally speaking, the process for obtaining leniency, like immunity, is a multi-step process that involves: (i) seeking a “marker” from the Bureau (a place in line which is, like an immunity application, typically made by an applicant’s counsel on a hypothetical basis), (ii) making an initial “proffer” of information to determine eligibility in the Program, (iii) the negotiation of a plea agreement and (iv) full disclosure and cooperation with the Bureau in an investigation and any resulting criminal prosecution. Successful leniency applicants may also be required to attend interviews and testify in any subsequent prosecutions.

Also, leniency applicants that disclose evidence of another criminal offences under the Act may be eligible for so-called “Immunity Plus” (full immunity from prosecution under the Bureau’s Immunity Program for a second previously unknown offence, if the applicant meets all the requirements of that Program).

The Bureau has also issued guidelines that describe the requirements an applicant must meet to obtain leniency under its Leniency Program (see: Leniency Program (Bulletin)).

LINKS AND RESOURCES

Competition Bureau Immunity Program: Competition Bureau – Immunity Program (Overview), Immunity from Prosecution (Pamphlet), Immunity Program under the Competition Act (Bulletin), Immunity Program FAQsCompetition Bureau Leniency Program: Leniency Program (Bulletin), Leniency Program FAQsTemplate Immunity Agreements: Corporate Immunity Agreement, Individual Confirmation Letter, Individual Immunity Agreement.

____________________

For information about my regulatory services: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney

Visit my Google+ page for more updates: Canadian Competition & Regulatory