On October 24, 2008 Canada’s Competition Bureau released new guidelines on competition law compliance for businesses and trade associations. Updating a prior bulletin released in 1997, the Bureau’s Information Bulletin on Corporate Compliance Programs guides businesses on how to develop and implement effective programs to foster compliance with Canada’s Competition Act. It also highlights the value of a credible and effective program as a mitigating factor when the Bureau assesses remedies for a competition violation. The Bureau’s Draft Information Bulletin on Trade Associations provides specific guidance on competition law compliance to trade associations and their members for the first time. It has been released for public consultation, with comments due by January 23, 2009.
Corporate Compliance Bulletin
The Competition Bureau’s Information Bulletin on Corporate Compliance Programs (Corporate Compliance Bulletin) sets out the following basic requirements of a credible and effective compliance program:
- Senior management should provide clear and unequivocal support for the program and should aim to foster a culture of compliance;
- A company publication containing policies and procedures tailored to the business’s operations (e.g., a “Do’s and Don’ts” guideline) should clearly establish what is, and is not, acceptable behaviour;
- There should be ongoing training on compliance issues for all employees who are in a position to potentially engage in, or be exposed to, conduct that violates the Competition Act;
- Businesses should monitor compliance on an ongoing basis, conduct compliance audits on a periodic, ad hoc or event-triggered basis, and establish reporting mechanisms that allow employees to freely report conduct that violates the law or company policy; and
- There should be consistent disciplinary procedures and incentives to punish instances of prohibited behaviour and to reward appropriate behaviour.
A credible and effective corporate compliance program can assist in preventing violations of the law and, where a business has identified a breach early on, may assist the business in securing immunity or leniency in exchange for assistance with a Competition Bureau investigation into the matter. Such a program can positively influence the Bureau’s approach to prosecution (i.e., launching proceedings civilly as opposed to criminally); act as a full due diligence defence; or be a mitigating factor warranting a reduction in a court-imposed penalty. The Corporate Compliance Bulletin does note, however, that where an established corporate compliance program has been knowingly contravened by a member of senior management or implemented solely as a sham to conceal or deflect liability, such behaviour or intention could be treated as an aggravating factor in prosecution and sentencing.
The Corporate Compliance Bulletin attaches a sample, generic (and non-prescriptive) corporate compliance program framework, employee certification letter and due diligence checklist. In our view, these templates must be substantially tailored to address the potential areas of risk faced by an individual business and industry.
Draft Trade Associations Bulletin
In addition to addressing traditional trade association activity, the Competition Bureau’s Draft Information Bulletin on Trade Associations (Draft Trade Associations Bulletin) addresses self-regulatory bodies and standard-setting organizations. Because associations are often comprised of competitors within an industry, the Draft Trade Associations Bulletin highlights the types of association activities that may raise concerns under the Competition Act including (in particular):
- Information-sharing activities (e.g., sharing of competitively-sensitive information such as pricing, costs, levels of output and strategic or marketing plans);
- Off-agenda and “side-bar” discussions;
- Membership rules, exclusions and expulsions that are punitive in nature or impair competition;
- Disciplinary sanctions that are aimed at forcing members to comply with association recommendations with an anti-competitive effect;
- Association fee guidelines that may facilitate an anti-competitive fee agreement among association members;
- Advertising restrictions or prohibitions on members;
- Actions by self-regulatory organizations that may impair competition;
- Voluntary Codes of Conduct which may have the effect of reducing competition, preventing new entry into a market, raising prices or limiting advertising, service levels or product choice; and
- Standard-Setting Organizations whose standards restrict competition, entry or innovation, or otherwise inhibit the ability of non-participants in the standard to compete, or require members to gain access to intellectual property controlled by certain members of the association.
The Draft Trade Associations Bulletin suggests that associations adopt compliance programs to assist members in identifying the boundaries of permissible conduct, and in identifying areas were further legal advice should be obtained. It contains a partial list of guidelines that might provide a starting point for such a program, although in our view these guidelines would have to be substantially tailored to sufficiently address the risks faced by a particular association and its members.