On October 11, 2007 Canada’s Competition Bureau released its revised bulletin on its Immunity Program under the Competition Act. The Bureau also released two companion documents, a “Frequently Asked Questions” (FAQs) note as well as a backgrounder entitled “Adjustments to the Immunity Program” which outlines the rationale for the modifications. The revised bulletin clarifies a number of outstanding issues that had been raised in the Bureau’s public consultation process and incorporates nearly all of the recommendations made by the Canadian and American Bar Associations.
Companies that discover potential criminal antitrust conduct in their operations can benefit from being the first to disclose such conduct to Canada's Competition Bureau. In so disclosing, such companies may receive complete immunity from both potential prosecution and the imposition of large fines and jail sentences for individuals. From the perspective of an international immunity applicant, while not all aspects of Canada’s immunity program are aligned with the immunity regimes of the major international antitrust enforcers, the Bureau has gone a long way in its revised bulletin towards remedying a number of irritants and grey areas that had previously made it difficult for such applicants and their advisors to predict the likely course of an application for Canadian immunity.
The most substantial procedural change is the elimination of the interim step of obtaining a Provisional Guarantee of Immunity (PGI) before obtaining final immunity. Going forward, applicants will receive a single immunity letter containing all of the terms required for the immunity grant. This modification brings the Bureau in line with other agencies, notably the U.S. Antitrust Division and the European Commission. The Bureau notes that eliminating the PGI actually reflected its current practice in that few applicants ever received a “final” immunity letter in recent years. Elimination of the PGI is a very welcome change. It removes an essentially unnecessary step in the process and will render the Bureau’s procedure much more comprehensible to offshore firms seeking immunity in Canada.
The Bureau’s bulletin and FAQs note also contain more promising language about circumstances in which perfecting a “marker” within the 30-day requirement would pose substantial difficulties for applicants making multijurisdictional immunity applications. The Bureau has outlined in greater detail what it may seek from an applicant at the proffer stage. It has elaborated its discussion on potential revocation of immunity to include a “grace period” wherein a potential revocation target will be provided an opportunity to purge its non-compliance prior to the Bureau making a formal recommendation to the Department of Public Prosecutions (DPP) for revocation.
Major Changes to Immunity Program
At the substantive level, the Bureau has made the following major changes to its Immunity Program:
i) the previous test for disqualifying an applicant because it was the sole Canadian beneficiary of the illicit conduct has been removed (except for single-party offences such as price maintenance);
ii) the “instigator” or “leader” disqualification has been removed and replaced by a single test barring immunity on grounds of coercion (described as requiring “clear and objective evidence” of such activity); and
iii) the requirement for potential restitution has been removed.
While the Bureau has not gone as far as the U.K.’s Office of Fair Trading by offering specific guidelines on the dimensions of coercion, these changes are generally in line with the recommendations of the consultation process and align the Bureau with the practices of the other major international antitrust enforcers.
The revised bulletin also notes that the Bureau and DPP will issue model templates for immunity agreements that will be available in advance for review by potential applicants. Such practice once again mirrors the U.S. Antitrust Division’s process and provides a greater degree of clarity for potential applicants.
As to confidentiality, the Bureau reaffirms that the identities of immunity applicants are to remain confidential; but the Bulletin clarifies that identities may be disclosed where it is necessary to obtain or preserve a judicial authorization order – such as a wiretap or search warrant – or where it is necessary to secure the assistance of another Canadian law enforcement agency. This observation reflects the reality of the legal status of immunity applicant witnesses who are rarely pure ”informants”; rather, they are witnesses to illegal conduct who would likely be subject to subpoena at the instance of an indicted defendant in any event.
On the policy level, the Bureau states that it will not adopt a “penalty plus” program. Under such a program (used by the U.S. Antitrust Division), an applicant’s failure to disclose all antitrust conduct will not result in loss of immunity. Instead, such failure will subject the applicant to harsher penalties for undisclosed offences on which it is subsequently indicted. The Bureau’s program will still potentially authorize loss of immunity where an applicant intentionally fails to disclose all Competition Act offences.
With respect to sheltering of immunity for officers, directors and agents, there is no real change. The Bureau will continue to assess each case individually and maintains that there is sufficient individual variability to merit such case-by-case approach. The lack of change in this area is unfortunate, since it detracts from the overall predictability of the program and is not in line with the practices of other major enforcers such as the Australian Competition and Consumer Commission and the U.K. Office of Fair Trading.
The Bureau has rejected instituting a program of “Proactive Immunity” under which it would actively seek out immunity applicants, pointing to the policy and practical difficulties involved in potentially initiating such a program. Notably, however, it has indicated that it will nonetheless contact second-in parties where an initial applicant has failed to perfect its immunity application. While this is an ominous development for failed applicants, it does represent positive news for later arrivals in the process.
Left unaddressed in the Bureau’s revised bulletin are the potential evidentiary and procedural complications of attempting to prosecute an applicant who is unable to perfect its application because of factors beyond its control, particularly under Canada’s present antitrust conspiracy offence, which requires demonstration of an “undue” prevention or lessening of competition for a successful conviction.
Beyond the immunity process, the Bureau has taken an important step in stating that it is developing a formal leniency and sentencing policy together with the DPP that will provide a series of incentives for applicants who arrive later in the resolution process. The Bureau has indicated that it expects to release a draft of such policy for consultation by the end of the year.
All things considered, the Bureau’s revised bulletin and explanatory documents offer a significantly greater degree of clarity for potential immunity applicants and will more closely align its immunity program with those of the other major international antitrust enforcers.