On September 25, 2013, the Competition Bureau published revised sets of the Frequently Asked Questions (FAQs) for its Immunity and Leniency Programs. The FAQs, together with the Bureau’s Immunity and Leniency bulletins, are designed to provide a comprehensive overview of the Bureau’s approach to immunity and leniency applications. The revised Immunity FAQ’s can be found here. The revised Leniency FAQ’s can be found here.
This bulletin outlines the salient amendments to the FAQs and provides commentary regarding an amendment that could potentially have significant implications for individuals and businesses considering a leniency application, namely how the Bureau determines its fine recommendation to the Public Prosecution Service of Canada (the “PPSC”) in a bid-rigging case.
II. The Bureau’s Immunity and Leniency Programs
Under the Bureau’s Immunity Program, business organizations and individuals who become involved in criminal anti-competitive activity with respect to one of its products or business interests may apply for immunity. The first qualifying applicant to approach the Bureau will qualify for full immunity from prosecution, subject to the Applicant meeting all of the other criteria of the Immunity Program.
Under the Bureau’s Leniency Program, the Bureau will recommend to the PPSC that qualifying applicants be granted leniency (i.e., reduced penalties) for timely and meaningful assistance to the Bureau’s investigation and any subsequent prosecution of others. While leniency candidates are not eligible for a grant of immunity under the Bureau’s Immunity Program, their early admission and cooperation can earn them a substantial basis for lenient treatment in sentencing.
The Immunity Program FAQs were initially published in 2003. They were updated in 2005, 2007 and 2010. This is the first update to the Leniency Program FAQs since they were published in 2010.
III. The Salient Amendments to the FAQs
A discussion of all of amendments and their implications is beyond the scope of this bulletin. The following, however, highlights the significant clarifications and changes and outlines the substance and implications of certain amendments.
- The Marker
- In addition to offences under sections 45 to 49 of the Competition Act (e.g., conspiracy and bid-rigging), the Bureau made clear that an applicant can request a leniency marker for such offences when liability arises from aiding or abetting any of these offences contrary to section 21 of the Criminal Code or counselling any of these offences contrary to section 22 of the Criminal Code).
- Immunity and leniency applicants that engage in obstruction after requesting immunity risks expulsion from the Immunity or Leniency Programs.
- Where the Bureau does not intend to pursue an investigation (e.g., where an Applicant’s proffer provides insufficient information that it committed an offence), the Bureau will make no recommendation to the PPSC as to a grant of leniency and will request that the Applicant withdraw its leniency marker.
- A party can and should request an immunity or leniency marker if it believes that it has committed an offence in Canada, regardless of whether it sells products directly or indirectly into Canada (e.g., a party that agrees with a competitor to stay out of the Canadian market).
- The Bureau will not make a formal recommendation for immunity or leniency to the PPSC in cases where it does not intend to further investigate the alleged anti-competitive conduct. In these situations, the Bureau will (a) advise the Applicant of its position in line; (b) confirm that the Applicant’s position will be respected should the Bureau decide to pursue the investigation at a later time; and (c) describe the scope of the products and conduct that would have been included in a leniency recommendation to the PPSC had the investigation continued.
- The Bureau has no obligation to notify the Applicant that its immunity or leniency marker has lapsed. It is the Applicant’s obligation to meet the timelines for completing its proffer and seek extensions from the Bureau where necessary.
- The Proffer
- An Applicant has a positive obligation to update their proffered information as they become aware of either new or corrected information. This must be done promptly and on an ongoing basis, regardless of whether or not the Bureau has specifically asked for the information.
- A leniency applicant should raise potential legal defences to Bureau officers at the earliest opportunity.
- How the Bureau Determines its Fine Recommendations in a Leniency Context
- To deter international market allocation agreements, all participants to the agreement or arrangement may be subject to a penalty whether or not they had any sales of the affected product in Canada.
- In making its fine recommendation, the Bureau will consider the total volume of commerce covered by the relevant agreements or arrangements and the need to deter and denounce bid-rigging. All participants in a bid-rigging offence are subject to a penalty whether or not they submitted a bid or agreed to withdraw a previously submitted bid, and whether or not they were ultimately chosen to supply the product for which they submitted a bid.
- In circumstances where the Applicant has compelling evidence that the overcharge was less than the Bureau’s 10% proxy, the Bureau may take this into account in determining the appropriate fine. However, the Bureau has compelling evidence that the overcharge is greater than the 10% proxy, the Bureau may use this alleged higher overcharge in determining the fine.
- Disclosure, Plea Agreements and Court Proceedings
- After entering a plea agreement, an Applicant has a positive obligation to update all information and evidence promptly as they become aware of either new or corrected information, records or witnesses. This must be done on an ongoing basis regardless of whether or not the Bureau has specifically asked for the information.
- The plea agreement may be revoked if it is determined that the Applicant has failed to fulfil the terms and conditions set out in its plea agreement. However, a minimum of 14 calendar days’ notice will be given to the Applicant so that the Applicant has an opportunity to remedy its failure before the plea agreement is revoked.
- The Bureau will not recommend a plea delay only because a party does not want to be the first party to plead guilty or because it does not want to be the only party to plead guilty at a specific time. After the plea agreement is executed, the timing of the resulting plea is at the discretion of the PPSC and the Courts.
- The Bureau will not disclose the identity of an Applicant or the information provided by that Applicant to any foreign law enforcement agency without the consent of the Applicant or unless required by law (e.g., in response to an order of a Canadian court of competent jurisdiction). The Bureau also provides that as part of an Applicant’s ongoing cooperation, without compelling reasons, the Bureau will expect a waiver allowing communication of information with jurisdictions to which the Applicant has made similar applications for immunity or leniency. Such waivers are expected to be provided immediately and are expected to cover both substantive and procedural information.
The aforesaid amendments are significant in varying degrees and in many cases, provide better guidance as to what can be expected in an immunity or leniency application process. However, one amendment in particular may potentially have significant implications for individuals and businesses considering a leniency application, namely how the Bureau determines its fine recommendation in a bid-rigging case.
With respect its fine recommendation in a bid-rigging case, the Bureau notes the following in its revised leniency FAQs:
In a bid-rigging case, the fine recommendation will be fact-specific and determined on a case-by-case basis. In making its recommendation, the Bureau will consider the total volume of commerce covered by the relevant agreements or arrangements and the need to deter and denounce bid-rigging. All participants in a bid-rigging offence are subject to a penalty whether or not they submitted a bid or agreed to withdraw a previously submitted bid, and whether or not they were ultimately chosen to supply the product for which they submitted a bid.
Ascribing sales of the winning bidder to the cover bidder (unsuccessful bidder(s)) for purposes of determining a fine may be appropriate where the bid-rigging arrangement results in one of the bidders not having any sales in Canada. This would be consistent with the Bureau’s approach of ensuring that parties face a penalty for international market allocation arrangements where as a result of the arrangement one or more party does not have sales in or into Canada.
However, if the above is applied by the Bureau more broadly so as to ascribe the volume of commerce of the winning bidder to other participants in the bid-rigging (i.e. the losing bidders) in all circumstances, this approach would depart from the approach used by the Bureau to determine fines in a cartel case that did not involve bid rigging and create disincentives for individuals and businesses to seek leniency. Under this approach, applicants may not be able to reasonably assess fine exposure because they could be penalized based on revenues of other parties. This may have unintended implications for the Bureau, including more individuals and businesses foregoing leniency applications and taking their chances in court when it comes to cases involved bid rigging.