Tangible Benefits for Corporate Compliance Programs: Show Us the Money
On Thursday, September 18, the Canadian Competition Bureau (Bureau) released a Draft Updated Corporate Compliance Bulletin. The Bureau's Corporate Compliance Bulletin was first released in 1997 and was most recently updated in 2010. The new Draft Bulletin is available for public consultation until November 17, 2014.
While the Draft Bulletin contains a number of updates, the most significant change is the creation of an incentive program that offers reduced fines for leniency program participants who have credible and effective corporate compliance programs. In both the Draft Bulletin and in remarks by the Commissioner of Competition (Commissioner) on September 18, the Bureau made clear that the mere pre-existence of a program will not automatically garner a company favourable treatment. However, the Bureau proposes that where a company has a credible and effective corporate compliance program the Bureau will recommend to the Court and to the Public Prosecution of Canada (PPSC) that the company receive a reduced fine in connection with an application under the Bureau's Leniency Program. This proposed approach would make the Bureau one of the few worldwide competition authorities to reward companies for having effective compliance programs, even when those programs have failed.
As the reduced fine only applies to Leniency Program applicants, the potential reduction in a fine will be on top of any reduction already received as a result of receiving leniency. In his speech introducing the policy, the Commissioner was asked what level of reduction would be offered. He declined to note a particular figure, preferring to mention case-by-case flexibility, but suggested that the Bureau may be considering something in the order of 5% to 10%.
The Draft Bulletin also provides that a credible and effective program may be given consideration in determining whether to pursue matters, which can be reviewed either criminally or civilly, under the civil track where both options are available (such as the false or misleading representations and deceptive marketing practices provisions). The pre-existence of a credible and effective compliance program will also increase the likelihood of a company receiving consideration for alternate case resolution. In addition, it may support a claim of due diligence where available under the Act.
Implementing a credible and effective program, or strengthening an existing program, after the offence has been committed can have a favourable impact on the Bureau's sentencing recommendations or remedies sought, though to a lesser degree than in a case of a credible and effective pre-existing program.
On the other hand, the Bureau notes that it may view compliance programs with suspicion where a manager participated in or condoned the contravention. That may indicate that management was not in fact committed to compliance, or it may cause the Bureau to view the program as a sham. The Bureau notes that contravention of the law despite the existence of a compliance program may be considered an aggravating factor for individuals. Similarly, a program implemented for appearances only, used to conceal evidence, or to obstruct justice, may also be considered an aggravating factor.
It is important to note that the Bureau has set the bar fairly high in terms of determining whether a company had a credible and effective compliance program. It will effectively audit the compliance program where firms seek favourable treatment based on the existence of a program. The Draft Bulletin lists the following seven elements as fundamental to a credible and effective compliance program:
- Management has demonstrated its clear, continuous and unequivocal commitment to and support for the compliance program;
- The compliance program is designed based on a thorough assessment of the potential risks faced by the company;
- The compliance program is thoroughly described in company publications;
- The compliance program includes an ongoing training and communications component that focuses on compliance issues for staff at all levels who are in a position to potentially engage in or be exposed to conduct in breach of the Acts;
- The compliance program includes effective monitoring, auditing and reporting mechanisms;
- The compliance program contains appropriate and consistent disciplinary consequences for breaches as well as appropriate incentive plans that are that demonstrate the seriousness with which the business views conduct in breach of the Acts; and
- The compliance program is continually be reassessed to ensure that it is delivering on its core objective. This includes monitoring new developments in the law and the firm's own business activities to determine whether the compliance program needs to be updated.
As noted above, where firms seek credit for the existence of a compliance policy, before giving credit, the Bureau will review the policy and its implementation. It will do so by requiring companies to provide the Bureau with timely access to relevant records and individuals in order to properly assess the integrity of the compliance programs. This could lead to concerns with respect to waiver of privilege in some cases.
While it is possible to quibble with some aspects of the Bureau's proposal – and those who wish to do so are encouraged to make submissions to the Bureau on its proposal – this is an exciting development. It is designed to offer firms obvious and tangible benefits for implementing effective compliance policies – with the goal of increasing the use and effectiveness of such policies. Most antitrust enforcement agencies have, thus far, failed to offer this type of support for compliance policies. The Canadian Competition Bureau is to be commended for its leadership.