John Pecman, who was confirmed as Canada's new Commissioner of Competition on June 12th, has launched a "Criminal Cartel Whistleblowing Initiative" to intensify the Competition Bureau's efforts to investigate and prosecute cartel activity. Unlike the Bureau's Immunity and Leniency Programs, which have had considerable success in getting companies (and occasionally individuals) involved in cartel offences to self-report, the whistleblowing initiative is targeted at parties who are aware of but not implicated in an offence.
Protections for whistleblowers were added to the Competition Act in 1999. The Bureau is not merely authorized, but is required, to keep the identity of a whistleblower confidential. In addition, there is a prohibition for an employer to take any retaliatory action against an employee who has provided information to the Bureau regarding an offence that the employee believes has been or is intended to be committed (or the employee's refusal to participate in the commission of an offence).
The Bureau has not received many tips under the whistleblowing provisions. This is likely a function of lack of awareness and incentives, rather than any obvious defect in the statutory protections. The Whistleblowing Initiative is designed to address the awareness issue by marketing the availability of the whistleblowing option, including with a toll-free hotline (1.800.348.5358). If this does not yield significant results, we expect that the Bureau may explore the possibility of establishing financial incentives for whistleblowers in a manner similar to the Canadian government's recent proposal to provide rewards of up to 15% for tips that assist in catching international tax evasion.
A little known feature of the Bureau's whistleblowing regime is that it may be available to businesses as well as individuals. The protection for the whistleblower's identity applies to any person who has notified the Commissioner of a possible offence and requested confidentiality and the retaliation provisions apply to independent contractors as well as employer-employee relationships. Thus, in our view, these provisions should apply to a customer reporting conduct involving its suppliers to the Bureau. However, the protection is only available in respect of offences, and would therefore not apply to abuse of a dominant position or other reviewable distribution practices.
The Whistleblowing Initiative, as well as recent high profile prosecutions in the construction, gasoline, chocolate confectionary and auto parts industries, among others, are a reminder about the importance of having an effective competition law compliance program. While some companies have incorporated internal whistleblowing protections and procedures in their compliance programs, many have not. Receiving such a tip before a call is placed to the Bureau can provide a company with important opportunities to access the time-sensitive Immunity and Leniency Programs before being targeted with search and seizure, subpoena or other investigative powers.