In September 2010, the Canadian Competition Bureau published the final version of its Leniency Program Bulletin, after consultations that followed the publication of two draft bulletins. The Leniency Program complements the Bureau's Immunity Program, which describes the conditions and process for obtaining complete immunity from prosecution for the first person to approach the Bureau with respect to a criminal cartel. The Leniency Program should be read in conjunction with the accompanying Frequently Asked Questions which provide further details on many aspects of the program.
Pursuant to its Leniency Program, the Bureau may recommend to the Public Prosecution Service of Canada (PPSC), which is responsible for prosecution under the criminal cartel provisions, lenient treatment for companies or individuals who cooperate with a Bureau investigation, but do not qualify for immunity as they are not the first to approach the Bureau with respect to an inquiry.
The Leniency Program sets out the following conditions for a company or individual to be eligible for leniency. The company or individual must
- have terminated its participation in the criminal conduct;
- provide complete and timely cooperation with the Bureau's investigation and any subsequent prosecution of the other cartel participants; and
- agree to plead guilty.
There are significant benefits for leniency applicants that meet the above conditions:
- The first leniency applicant will benefit from a reduction of 50 per cent of the fine that would otherwise have been recommended by the Bureau. In addition, no charges will be laid against the applicant's current directors, officers or employees, provided that these individuals cooperate with the investigation.
- The second leniency applicant will receive a 30 per cent reduction of the fine otherwise recommended; its directors, officers, employees and agents may be charged, depending on their role in the offence.
- Subsequent leniency applicants may receive a discount, determined on a case-by-case basis, depending on their place in the line and the timeliness of their cooperation.
Fixed fine reduction levels for the first and second leniency applicants is an improvement from previous drafts of the program, which provided that the first and second applicants were eligible for a reduction of "up to" 50 per cent and 30 per cent, respectively, at the discretion of the Bureau, with the full reduction only available in the case of "exemplary cooperation."
The Leniency Program further states that the recommended fines will be determined on the following basis:
- The Bureau first establishes a base level fine, generally by using a proxy of 20 per cent of a leniency applicant's affected volume of commerce in Canada to account for the overcharge resulting from the cartel and deterrence. In rare circumstances, the Bureau is open to consider evidence that demonstrates a lower overcharge.
- The base fine level may be adjusted up or down to take into consideration relevant aggravating and mitigating factors.
- Once the 20 per cent proxy has been increased or reduced to account for aggravating or mitigating factors, the leniency discount will be applied (e.g., 50 per cent for the first leniency applicant).
A leniency applicant may also benefit from the Bureau's "Immunity Plus" program if the applicant discloses evidence of a criminal cartel unknown to the Bureau. For example, Company ABC is not the first to disclose a cartel with respect to Product A, but discloses information relating to a cartel unknown to the Bureau with respect to Product B. In exchange for its cooperation, Company ABC will be granted immunity for the cartel on Product B, and will benefit from an additional discount of five per cent to 10 per cent on the recommended fine with respect to Product A.
The most significant change in the final Leniency Program is to the leniency process. The initial draft bulletin issued in 2008 provided that the Bureau's final sentencing recommendation to the PPSC was only made after a leniency applicant had provided full disclosure of all non-privileged information and records and once directors, officers and employees had been interviewed by the Bureau. A company applying for leniency would therefore have had to provide all evidence prior to knowing the actual benefits of its cooperation. This uncertainty has been resolved and the final Leniency Program provides that full disclosure from a leniency applicant is only required once the applicant has reached a plea agreement with the PPSC. The plea agreement will contain the description of the illegal conduct, the relevant product(s) and period, as well as the fine that the PPSC will recommend to the Court.
The process set out in the Leniency Program is similar to the immunity process:
- The applicant first requests a "marker" to determine whether leniency is available with respect to the product(s) subject to the cartel activity. At the marker stage, information may be provided on a hypothetical basis. If leniency is available, the Bureau advises the applicant of its place in the line (i.e., first-in, second-in, etc.).
- If the marker is granted, the applicant through its counsel provides a "proffer," which identifies the applicant and describes the illegal activity on a hypothetical basis. The Leniency Program provides for the proffer to be made within 30 days of a marker being granted.
- The Bureau makes its leniency recommendation to the PPSC, which then conducts plea discussions with the leniency applicant.
- Once a plea agreement has been reached, the leniency applicant provides full cooperation (including providing records and interviews with individuals) and pleads guilty before the court.
The Bureau’s Leniency Program, like its Immunity Program, provides significant benefits to cartel participants that decide to cooperate with an investigation. However, these benefits are only available to businesses that react quickly and contact the Bureau before other participants do so. These programs emphasize the importance for a company to have an effective compliance program in place that not only reduces the risk that of employees engaging in anti-competitive conduct, but also allows for early detection and reporting of conduct that may offend the Competition Act.