In June, the Competition Bureau released its updated Corporate Compliance Programs bulletin. The bulletin is intended to ensure compliance with the Canadian Competition Act. It sets out the benefits for companies who put in place and follow “credible and effective” competition law compliance programs, as well as the basic elements of such programs. Here are the top 5 things all companies need to know about the Competition Bureau’s updated bulletin:
- Having a credible and effective compliance program in place at the time a breach occurs may mitigate criminal or civil consequences
Predictably, the revised bulletin reminds us that by having a robust competition law compliance program in place, companies can better prevent contraventions of theCompetition Act and thereby avoid the serious consequences that may flow from a breach (e.g. time and expense responding to an investigation, multi-million dollar fines and monetary penalties, jail time for individuals involved in the conduct, damages from private party and class action lawsuits, prohibition from bidding on public contracts, negative publicity). And, of course, a compliance program is invaluable if it provides a company with early detection of a violation, which could allow the company to secure immunity (or leniency) from prosecution.
The most notable element in the Competition Bureau’s revised bulletin is that despite a competition law breach, a pre-existing credible and effective program may still be beneficial to a company. With respect to companies seeking leniency treatment for criminal cartel and bid-rigging offences, a pre-existing credible and effective program may be considered as a mitigating factor in the Competition Bureau’s recommendation of the appropriate fine to the Prosecution Service of Canada (“PPSC”). In non-criminal matters, a pre-existing program may be considered as a mitigating factor for the magnitude of the administrative monetary penalty sought by the Competition Bureau. In the appropriate circumstances, the Competition Bureau may take into account the pre-existence of a credible and effective compliance program when deciding whether to pursue a matter along a criminal or civil track (when both are available). The Bureau may also be more inclined to consider an alternative form of resolution (versus litigation) where a credible and effective program was in place at the time of the contravention.
- Companies must prove that their compliance program is credible and effective
If a company is seeking favourable treatment on the basis of its pre-existing credible and effective compliance program, then it is up to the company to prove that its program is credible and effective. In the Bureau’s view, a program is credible and effective where the company can show that it is “reasonably designed, implemented and enforced in the circumstances.”
In testing the credibility and effectiveness of a compliance program, the Bureau will expect access to the company’s relevant records and key individuals to make its determination.
The Bureau has provided some indication (in the form of hypotheticals) as to how it may assess the credibility and effectiveness of a pre-existing compliance program in light of a breach of the Competition Act.
- A credible and effective program must contain 7 basic elements
Although the Bureau says that companies should implement a credible and effective compliance program that is commensurate with its size and business activities, it has established the following basic requirements that all credible and effective programs should have:
- Management Commitment and Support
- Risk-based Corporate Compliance Assessment
- Corporate Compliance Policies and Procedures
- Training and Education
- Monitoring, Verification and Reporting Mechanisms
- Consistent Disciplinary Procedures and Incentives for Compliance
- Compliance Program Evaluation
These requirements are to be tailored to the operations of a business and address its specific risk profile. In addition to elaborating on the seven basic elements, the bulletin also includes suggestions on how to meet the requirements, a sample framework setting out the components of a credible and effective program, a sample certification letter for employees to sign indicating they have read and understand the company’s compliance program, and a due diligence checklist to assist in addressing competition law requirements in developing training and communications materials.
- A credible and effective compliance program can help businesses identify whether they may be the victim of anti-competitive conduct by others
Educating employees as to the parameters of acceptable business behaviour will increase their awareness of possible anti-competitive conduct among competitors, suppliers or customers. For example, a compliance program can enable employees to identify bid-rigging and encourage them to report suspicious activity so that if the business is a victim of bid-rigging (or has information about a bid-rigging scheme) the business is in a position to take the appropriate steps.
- The Competition Bureau is renewing its focus on Corporate Compliance
The Bureau’s newest version of its compliance bulletin reflects a renewed focus in promoting competition law compliance in the private sector. The Bureau has also recently established a Compliance Unit which, among other things, will administer the new bulletin. In addition to the release of the Corporate Compliance Programs bulletin, the Bureau has recently released shorter guidance documents (compliance program fact sheets) and will be releasing other materials (specifically addressing small and medium sized businesses) during its cross-Canada compliance roadshow. These efforts fit within the Bureau’s strategic commitments for 2015-2018, which includes implementing an “outreach strategy that will actively encourage businesses to adopt rigorous compliance practices, policies and programs”.