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Trends and climate

Trends

Have there been any recent changes to the cartel regime? If so, have they had a significant impact on enforcement activity?

The Competition Bureau is in the process of revising its immunity and leniency programmes, which could have a significant impact on the operation of the programmes themselves and the degree of participation by potential applicants. Expected changes to the immunity programme include:

  • providing for an interim grant of immunity for first-in applicants (with no full immunity given until prosecutors are satisfied with cooperation);
  • immunity applicants having to identify themselves shortly after the bureau grants a marker (at least by the point of making a proffer); and
  • non-privileged records from companies’ internal investigations being treated as presumptively disclosable facts in the possession of cooperating parties. 

An expected change to the leniency programme includes all leniency applicants being potentially eligible for fine discounts of up to 50% (thereby moving toward a system of rewarding applicants based on the value of their cooperation rather than who is first to contact the agency for leniency). The bureau expects to circulate a draft of the revised programmes for public consultation soon. 

The bureau has advised that the changes are prompted partly by the outcome of recent unsuccessful prosecutions.

Are there any proposals to reform or amend the existing cartel regime?

See above.

Bill C-49, if enacted, would amend the Canada Transportation Act and make consequential amendments to the Competition Act. Bill C-49 would create an additional exception to the criminal offences of conspiracy and bid rigging, among other things, whereby such conduct would be permissible when carried out by an air transportation undertaking and authorised by the minister of transport under specific circumstances.

Have there been any recent key cases?

On April 25 2017 car parts manufacturer Mitsubishi Electric Corporation pleaded guilty to three counts of bid rigging for participating in an international conspiracy and was fined C$13.4 million by the Ontario Superior Court of Justice. This is the second-largest bid-rigging fine to date. The largest was C$30 million, imposed in Yazaki Corporation in 2013.

Legal framework

Legislation

Which legislation applies to cartels and what are the relevant substantive provisions?

Cartels are prohibited by the Competition Act, a federal statute applied across Canada and to all industries, subject to limited exceptions. The core prohibition is contained in Section 45 (the general conspiracy provision). There is also a civilly reviewable provision – Section 90.1 – pursuant to which, competitor agreements or arrangements that prevent or lessen competition substantially may be subject to a remedial order. Section 90.1 applies to competitor agreements or arrangements that fall short of an offence under Section 45. The Competition Act also contains specific offences prohibiting the implementation of a foreign conspiracy (Section 46), prohibiting bid rigging (Section 47), prohibiting conspiracy related to professional sport (Section 48) and prohibiting conspiracy involving federal financial institutions (Section 49).

Institutions

Which bodies are the relevant regulatory and prosecutory authorities and what are their specific roles?

The Competition Bureau (the head of which is the commissioner of competition) is the government agency that administers and enforces the act. The Public Prosecution Service of Canada (the head of which is the director of public prosecutions (DPP)), also enforces the criminal provisions of the act. In the context of cartels, investigations are conducted by the Cartels and Deceptive Marketing Practices Branch (formerly the Criminal Matters Branch) of the bureau. Where the commissioner concludes that a criminal offence under the act has been committed, a recommendation is made to the DPP that charges be laid.

The DPP fulfils the responsibilities of the attorney general of Canada in the discharge of his criminal law mandate by prosecuting criminal offences under federal jurisdiction. It is the DPP who is ultimately responsible for initiating and conducting prosecutions under the criminal provisions of the act. Such criminal prosecutions can take place before the superior court of a province or the Federal Court.

Are there any sectoral regulators with concurrent powers?

For criminal cartel enforcement, there is no sectoral regulator with concurrent powers to those of the bureau.

Application

Does the legislation apply to both formal agreements and informal practices?

Yes. However, the cartel provisions of the act do not apply to mere conscious parallelism (eg, where identical price changes occur almost simultaneously among competitors without any tacit or express agreement among them).

Does the legislation apply to individuals, companies or both?

Both.

Does the legislation subject companies to civil liability, criminal liability or both?

Both. Sections 45 to 49 of the act are criminal offences that prohibit cartel behaviour. Section 36 allows persons who have suffered loss or damage as a result of these criminal offences to bring civil damage claims in the civil courts. Section 36 claims are frequently brought as class actions. There is also a civil provision in the act – Section 90.1 – which permits the commissioner to seek remedial orders (no fines or imprisonment) with respect to agreements between competitors that substantially lessen or prevent competition. Private enforcement and damage awards are not possible for a contravention of Section 90.1.

Does the legislation subject individuals to civil liability, criminal liability or both?

Both.

Where cartel conduct is punishable by both civil and criminal penalties, can the enforcement authority pursue both types of penalty? How does the authority decide which penalties to seek?

No proceeding may be commenced under the cartel provisions of the act on the basis of facts that are the same or substantially the same as the facts on which a proceeding is commenced under Section 90.1 (the civil provision). 

Senior bureau staff have repeatedly stated that Section 45(1) will be applied only in connection with the most egregious forms of cartel agreement and that other forms of competitor collaboration will be assessed under Section 90.1. In its Competitor Collaboration Guidelines, the bureau has indicated that it will seek penalties under Section 45 only where there is an agreement between competitors to fix prices, allocate markets or restrict output that constitutes a naked restraint on competition. Other forms of competitor collaborations, such as strategic alliances or joint ventures, may be reviewed under Section 90.1 only where they are likely to substantially lessen or prevent competition.

Are there any sector-specific offences or exemptions?

See “Which legislation applies to cartels and what are the relevant substantive provisions?” above.

There are a number of exemptions and defences to the cartel offence under Section 45. 

Section 45(4) contains an ancillary restraints defence, which applies if the restraint (eg, agreement regarding pricing, market and customer allocation, or output/capacity) is directly related to, and reasonably necessary for giving effect to, a broader and lawful agreement. The ancillary restraints defence is available when:

  • the restraint is ancillary to a broader or separate agreement that includes the same parties;
  • the restraint is directly related to, and necessary for giving effect to, the objective of that broader or separate agreement; and
  • the broader or separate agreement, when considered in the absence of the restraint, does not contravene Section 45.

Section 45(7) contains a regulated conduct defence which allows a person to potentially avoid liability under Section 45 when the conduct in question was required or authorised by or under another act of Parliament or provincial legislature.    

Section 45(5) of the act contains a qualified exception for agreements between competitors that relate only to the export of products from Canada. No person may be convicted of an offence under Section 45(1) in respect of an agreement that relates only to the export of products from Canada, unless the agreement:

  • has or is likely to result in a reduction or limitation of the real value of exports of a product;
  • has restricted, or is likely to restrict, any person from entering into or expanding the business of exporting products from Canada; or
  • relates only to the supply of services that facilitate the export of products from Canada.

Section 45(6)(a) provides an exception for agreements that are entered into between affiliated companies.

Section 45(6)(b) provides an exception for federal financial institutions. Section 45(1) does not apply if the agreement is between federal financial institutions. An agreement between federal financial institutions is assessed under Section 49 of the act.

The act grants underwriters a partial exemption from Section 45. Where an agreement or arrangement has a reasonable relationship to the underwriting of a specific security, Section 45 does not apply to such agreement or arrangement if it is between persons who are:

  • members of a class of persons who ordinarily engage in the business of dealing in securities; or
  • between such persons and the issuer of a specific security (in the case of a primary distribution) or the vendor of a specific security (in the case of a secondary distribution).

In addition, Sections 4 and 6 are exempt from the application of the act:

  • certain collective bargaining activities (Section 4); and
  • certain agreements or arrangements in respect of amateur sports (Section 6).

To what extent, if any, does the legislation apply to extraterritorial conduct?

The general cartel provision, Section 45, does not contain an express territorial limitation or extension.

Section 46 is a specific offence that prohibits the implementation of a foreign conspiracy. It indirectly extends criminal jurisdiction over foreign cartels by rendering any corporation that carries on business in Canada criminally responsible for implementing the conspiracy in Canada.

Apart from Section 46, the jurisdiction of the cartel offences under the act is determined by adjudicative jurisdictional principles at common law, namely whether a Canadian court has legal authority over the criminal offence under the act and the person alleged to have breached the criminal offence under the act.

Investigations

Initiating an investigation

Who can initiate an investigation of potential cartel conduct?

It is the commissioner of competition’s responsibility, through the Competition Bureau, to investigate potential cartel conduct.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

Generally, complainants or third parties have no specific rights as bureau inquiries are conducted in private. However, where a formal complaint is initiated under Section 9 of the Competition Act (six-person Canadian resident complaint under oath), the complainants are entitled to be informed of the progress of the inquiry.

What obligations does a company have on learning that an investigation has commenced?

A company should preserve all relevant records, anticipating that it may be subject to a production order or search by the bureau as well documentary production obligations in the event of civil litigation. A company will also have an obligation to comply with court orders authorising the gathering of information (such as a production order under Section 11 or search and seizure under Section 15 of the Competition Act), unless the order is otherwise challenged.

What obligations does a company have if it believes that an investigation is likely?

See above.

What are the potential consequences of failing to act or delaying action?

There can be adverse consequences for failing to preserve relevant information, including being subject to various obstruction offences under the Competition Act (Sections 64 and 65). In civil litigation, the consequence could be an adverse inference finding, presuming that the destroyed evidence would have been unfavourable to the party who destroyed it.

Formal stages of investigation

What are the formal stages of and approximate timeframe for investigations?

The bureau may investigate cartel behaviour through informal examinations and formal inquiries commenced under the act. The main difference between the two paths is that the certain evidence gathering tools under the act are only available after a formal inquiry has been commenced. It is common for the bureau to carry out an informal inquiry as a precursor to formal inquiry under the act. For criminal matters, the commissioner may commence a formal inquiry whenever he or she has reason to believe that a person has contravened an order made under certain provisions of the act or a criminal offence under the act has been, or is about to be, committed. There is no general timeline for these inquiries, and there are no statutes of limitation in relation to the conspiracy provisions.

The bureau also has immunity and leniency programmes, which are tools for detecting and investigating cartel offences under the act. Under the immunity programme, the first party to disclose to the bureau an offence not yet detected or to provide evidence leading to the filing of charges may receive immunity from prosecution from the Public Prosecution Service of Canada (PPSC) as long as the party cooperates with the bureau. The bureau’s leniency programme complements its immunity programme. Under the leniency programme, the bureau may recommend to the PPSC that cooperating persons who have violated the cartel provisions under the act, but who are not eligible for a grant of immunity, may be considered for lenient treatment in sentencing.

Investigative powers

What investigative powers do the authorities have?

The bureau has access to considerable evidence gathering powers under the Competition Act and the Criminal Code. Notably, it can obtain court authorisation for:

  • production orders;
  • search warrants; and
  • wiretaps.

Section 11 orders are essentially subpoenas, which are obtained and used by the commissioner to obtain information in the possession of a person (including a corporation) that is likely to have information that is relevant to a matter under inquiry pursuant to Section 10.

Information can be obtained on the issuance of a Section 11 order in the following ways:

  • oral examinations, under oath, of individuals on any matter that is relevant to the inquiry;
  • the production of records, including electronic records; and
  • written returns requiring a person to create or prepare detailed information under oath and provide it to the commissioner.

Section 11(2) also explicitly contemplates an order compelling a Canadian corporation to produce records in the possession of a corporation’s Canadian or foreign affiliates, where the issuing judge is satisfied that such affiliate has records relevant to the inquiry. As such, under Section 11(2), the commissioner can seek a court order requiring a Canadian subsidiary to produce records of its foreign parent or sister companies.

Section 15 also authorises the commissioner to apply ex parte to a judge for a warrant allowing bureau officers to conduct searches and seizures, including searches of computer systems and the seizure of electronic documents. 

The commissioner can also intercept and use judicially authorised wiretaps under Part VI of the Criminal Code. A judge who gives an authorisation for a wiretap may, at the same time, issue a warrant or make a production order under the code.

What is the geographic reach of public enforcement actions?

The geographic reach of public enforcement actions is broad. The bureau’s cartel investigations relate to both domestic and international cartel activity. Section 11(2) explicitly contemplates an order compelling a corporation in Canada to produce records in the possession of the corporation’s Canadian or foreign affiliates, where the issuing judge is satisfied that such affiliate has records that are relevant to the inquiry. As such, under Section 11(2), the commissioner can seek a court order requiring a Canadian subsidiary to produce records of its foreign parent or sister companies.

A warrant issued under Section 15 may be enforced anywhere in Canada, irrespective of the court issuing the warrant.

When is court approval required to invoke these powers?

The commissioner is required to obtain court approval in order to use these evidence-gathering powers. 

Orders made pursuant to Section 11 can be sought ex parte by the commissioner from a court in the course of a formal inquiry commenced under Section 10.

The act authorises the commissioner to apply ex parte to a judge for a warrant allowing officers of the bureau to conduct searches and seizures. Before issuing a warrant a judge must be satisfied that there are reasonable and probable grounds to believe that one of the act’s provisions has been, or is about to be, breached, and that there will be relevant evidence on the searched premises. Warrantless seizures are permitted in “exigent circumstances”, where the delay necessary to obtain a warrant under Section 15(1) would result in the loss or destruction of evidence.

In order to obtain wiretap authorisation, the commissioner must submit a sworn affidavit in accordance with the requirements of the Criminal Code. The affidavit must set out certain information, including:

  • the facts relied on to justify the belief that the authorisation should be given, together with details of the alleged offence;
  • the type of private communication to be intercepted; and
  • how and where the officers propose to accomplish the interception.

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

Yes, searches of business and personal premises may be authorised by Section 15. The searches are normally carried out by bureau officers. The bureau is not required to wait for legal advisers to arrive before commencing a search, but will typically give legal advisers a short but reasonable amount of time to arrive.

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

The subjects of a Section 11 order or a Section 15 search warrant must comply fully with the authorities. Those in control of premises to which a Section 15 search warrant has been issued, on presentation of the warrant, are required by law to permit entry to the person(s) named in the warrant to enter the premises, search the premises and copy or seize anything they are so authorised to copy or seize by the warrant.

Failure to comply with a Section 11 order or a Section 15 search warrant can constitute obstruction of justice contrary to the Criminal Code (Section 139(2)) and the Competition Act (Sections 64 and 65). Obstruction under the Criminal Code is an indictable offence which could result in imprisonment for up to 10 years. Any person found to have engaged in obstruction under Sections 64 or 65 is guilty of an offence and liable to a conviction on either an indictment or a summary conviction. A person convicted under an indictment is liable to a fine in the discretion of the court and/or imprisonment for a term not exceeding 10 years. A person convicted under a summary conviction is liable to a fine not exceeding C$100,000 and/or imprisonment for a term not exceeding two years.

Officers, directors or agents of a corporation can be liable for that corporation’s obstruction under certain circumstances. The penalties for corporation officers, directors or agents are the same as those provided for in respect of the offence committed by the corporation.

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

Yes.

Section 19 sets out the procedure for dealing with records required to be produced pursuant to Sections 11 and 15 but that may be subject to claims of solicitor-client privilege. Such documents cannot be seized immediately by officers under a search warrant. They must be sealed pending an assessment of the validity of the privilege claim within a limited time. 

Regarding wiretaps, in order to protect against any potential violation of solicitor-client privilege, the affidavit accompanying the application must fully disclose all circumstances to enable the receiving judge to stipulate terms and conditions which will enable the protection of privileged communications.

There are unique features of in-house counsel’s position and functions that complicate the application of solicitor-client privilege to the documents they prepare and distribute. Solicitor-client privilege protects legal advice but does not protect advice on purely business matters, even when prepared by a lawyer. This distinction can be complicated when in-house counsel has multiple corporate responsibilities, such as being a corporate secretary or a member of the board of directors. Courts may refuse to protect a communication from in-house counsel with solicitor-client privilege if the communication was circulated in the in-house counsel’s capacity as a business executive rather than a lawyer.

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

Canada’s Charter of Rights and Freedoms (eg, the right against unreasonable search and seizure, the right against self-incrimination) imposes limitations on investigatory powers. As such, the exercise of such powers must comply with the charter.

What is the process for objecting to an authority’s exercise of its claimed powers?

A party may seek to vary or set aside a court order authorising an evidence-gathering mechanism, such as a Section 11 order, a search and seizure under Section 15 or a wiretap.

Publicity and confidentiality

What information about investigations will be made publicly available and at which stage(s) of the process?

The bureau has a statutory duty, contained in Section 10(3), to conduct its inquiries privately and to maintain the confidentiality of the information it receives. However, in order to investigate and obtain relevant information from third parties, the bureau may have to inform third parties about the investigation, in general terms, in order to explain why information is needed from them. The bureau may rely on the exception to confidentiality in Section 29 which permits it to communicate information for the purpose of administering or enforcing the act. However, in practice, the bureau is reluctant to disclose any confidential information to third parties when conducting investigations.

Information used to obtain a Section 15 warrant (and for search warrants under the Criminal Code) are presumed to be publicly accessible unless a court orders otherwise. When applying for a search warrant the commissioner may seek a sealing order denying access to, and the disclosure of, information related to the Section 15 search warrant pursuant to the sealing order provisions for warrants and productions under Section 487.3(2)(a) of the code. 

Is any information automatically confidential and is confidentiality available on request?

Section 29 is the primary provision dealing with the treatment of confidential information in the possession of the bureau. Section 10(3) stipulates that all bureau inquiries are to “be conducted in private”. Section 29 requires the following, among other things, to be kept confidential:

  • the identity of any person from whom information was obtained pursuant to the act;
  • any information obtained pursuant to Sections 11, 15 or 16; and
  • any information provided voluntarily pursuant to the act.

This information may be disclosed where:

  • authorisation has been given by the person who provided the information;
  • the information has already been made public;
  • disclosure is made to a law enforcement agency; or
  • disclosure is made in order to administer the act.

The bureau takes the position that Section 29 allows the agency to share confidential information with foreign competition law enforcement agencies on the grounds that such exchanges are made for the purpose of enforcement or administration of the act.

International cooperation

Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

Yes. Enforcement of Canadian competition law, particularly in relation to cartel enforcement, benefits from a high degree of international cooperation. Such cooperation appears to have strengthened over the past several years, particularly through the auspices of the International Competition Network. There is an especially close working relationship between the bureau and antitrust authorities in the United States and the European Union.

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

The bureau takes the position that Section 29 of the act allows it to share confidential information with foreign competition law enforcers on the grounds that such exchanges are made for the purpose of the act’s administration or enforcement and, consequently, the bureau does not require waivers to do so. However, the jurisdictions with which the bureau shares information may themselves require waivers.

Regarding leniency applications under the bureau’s immunity and leniency programme, the bureau expects a waiver to be given to agencies in those jurisdictions to which the applicant has made similar applications for immunity or leniency authorising such agencies to communicate and share information with the bureau.

Decisions

How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

Other than through the bureau’s leniency and immunity programme, the commissioner has two general options to resolve a cartel investigation:

  • discontinue the investigation (ie, formal inquiry); or
  • refer the matter to the PPSC with a recommendation that criminal charges be laid. 

The PPSC will then independently decide whether to lay charges, and therefore whether a prosecution is in the public interest. 

If charges are laid, the ensuing criminal proceeding may be resolved by a negotiated plea agreement and sentence – these require court approval.

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

At any stage of a criminal proceeding the parties may resolve the matter by a court-approved negotiated plea agreement and sentence. Frequently, the crown and defence will jointly present to the court a plea agreement and joint submission on penalty. A court should only deviate from the recommendations of a joint submission where accepting the recommendation would either be contrary to the public interest or would bring the administration of justice into disrepute.

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

The criminal proceeding will be adjudicated by way of a criminal trial.

Which party must prove its case? What is the relevant standard of proof?

The crown has the burden of proving each of the elements of the cartel offence beyond reasonable doubt.

Is there a hearing? If so, what is the process for submitting evidence and testimony?

Yes. The hearing takes the form of a criminal trial.

What are the accused’s procedural rights?

The accused has the procedural right traditionally afforded to an accused in a criminal trial, such as the right to remain silent (ie, not to testify) and the requirement that the crown prove all of the elements of the cartel offence beyond a reasonable doubt.

Appeal process

What is the appeal process?

There is generally an appeal as of right arising from a judgment in a criminal proceeding. The jurisdiction of courts of appeal to hear appeals is entirely statutory. Appeals arising from convictions for indictable offences under the Competition Act are brought to the Court of Appeal for the province in which the criminal proceeding was prosecuted.  

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

There are distinctions between appeals by the accused and the crown. An accused may appeal the conviction on any ground that involves a question of law alone as of right and on any ground that involves a question of fact, or mixed law and fact, with leave of the court of appeal. The Crown may appeal against a judgment or verdict of acquittal on any ground of appeal that involves a question of law. The crown may not appeal against a judgement or verdict of acquittal on any ground that involves a question of fact or mixed law and fact.

Penalties

Penalties for companies

What are the potential penalties for companies involved in a cartel?

The following are the maximum penalties for companies who commit a cartel offence under the Competition Act: 

  • Section 45 (the general conspiracy provision of the act) – a fine not exceeding C$25 million;
  • Section 46 (implementation of a foreign conspiracy) – a fine at the discretion of the court;
  • Section 47 (bid rigging) – a fine at the discretion of the court;
  • Section 48 (conspiracy related to professional sport) – a fine at the discretion of the court; and
  • Section 49 (conspiracy involving federal financial institutions) – a fine not exceeding C$10 million. 

Are there guidelines in place for penalties? If not, how are penalties normally calculated?

There are no sentencing guidelines for offences under the Competition Act. An appropriate sentence for offences under the act is informed generally by the sentencing provisions of the Criminal Code, sentencing principles at common law and, where applicable, the Competition Bureau’s leniency policy.

If an accused is pleading guilty pursuant to the bureau’s leniency programme, the fine is informed by the bureau’s leniency guidelines which lay out the method that it will use to determine the magnitude of the fine it will recommend to the Public Prosecution Service of Canada. The bureau’s starting point for determining a fine generally involves calculating a proxy of 20% of the leniency applicant’s volume of affected commerce in Canada throughout the duration of the offence. Thereafter the bureau will weigh any aggravating and mitigating circumstances which may cause the number arising from step one to increase, decrease or remain intact. The bureau then applies the leniency discount, the quantum of which depends on the applicant’s position in the leniency queue.

Do the authorities take into account any penalties imposed in other jurisdictions?

Yes, in certain cases where there is coordination with other jurisdictions to address double-counting. For example, in July 2016, the bureau announced that Nishikawa Rubber Co Ltd, a manufacturer of automotive parts, had pleaded guilty in the United States and agreed to pay US$130 million for its part in an international conspiracy that affected vehicles sold in the United States and Canada. The bureau highlighted the close collaboration between itself and the US Department of Justice, which led the US investigation and guilty plea by Nishikawa, but no corresponding prosecution of Nishikawa in Canada.

How can a company mitigate its exposure to fines?

A company can implement an effective and robust compliance programme, particularly before an occurrence that may give rise to an investigation. Where improper conduct has already occurred, a company may also avail itself of the immunity and leniency programmes in order to mitigate exposure.

Penalties for individuals

What are the potential penalties for individuals involved in a cartel?

The following are the maximum penalties for individuals who commit a cartel offence under the Competition Act, in addition to the potential fines noted in “What are the potential penalties for companies involved in a cartel?” above: 

  • Section 45 (the general conspiracy provision of the act) – imprisonment for a term not exceeding 14 years;
  • Section 47 (bid rigging) – imprisonment for a term not exceeding 14 years;
  • Section 48 (conspiracy related to professional sport) – imprisonment for a term not exceeding five years; and
  • Section 49 (conspiracy involving federal financial institutions) – imprisonment for a term not exceeding five years.

Do the authorities take into account any penalties imposed in other jurisdictions?

Yes. See “Do the authorities take into account any penalties imposed in other jurisdictions?” above.

Is a company permitted to pay a penalty imposed on its employee?

Yes.

Is a company permitted to continue to employ an employee involved in cartel conduct?

Yes.

Private actions

Private damages actions

Can private actions for damages be brought in your jurisdiction? If so, who may assert such actions?

Section 36(1) of the Competition Act provides for a civil remedy to any person who has suffered loss or damages as a result of a breach of criminal offence under the act, including its cartel provisions.

What relief may be awarded to successful claimants (eg, damages, costs, injunctive relief or attorneys’ fees)?

If liability is proven, an amount equal to the loss suffered is payable together with an amount in respect of the costs of the investigation. Notably, the act only provides for single damages, rather than the treble damages available in the United States. It is common for cases brought pursuant to Section 36(1) also to include claims for common law damages based on civil conspiracy, restitutionary relief and punitive damages.

How are the amounts of any damages, costs or attorneys’ fees calculated?

See above.

Have there been any notable recent cases in which a private action was the subject of adjudication?

Private actions arising from the Competition Act are most often brought by way of class actions. There are a number of ongoing class proceedings, including many arising from the global auto parts conspiracy. These class proceedings have not been disposed of by way of a trial.

Class actions

Can class actions be brought in your jurisdiction? If so, what is the procedure for such cases?

Yes. See above. 

A plaintiff who wishes to bring a class action must first obtain leave of the court to certify the action as a class action (referred to as ’certification’ in common law provinces and ’authorisation’ in Quebec). If certified, the merits of the action would be litigated, leading to a common issues trial. 

A claim cannot generally be certified unless the following requirements are met: 

  • the pleadings disclose a cause of action;
  • there is an identifiable class of two or more persons that would be represented by the representative plaintiff;
  • the claims of the class members raises common issues;
  • a class proceeding would be a preferable procedure for the resolution of the common issues; and
  • there must be a representative plaintiff who:
    • would fairly and adequately represent the class;
    • has produced a workable plan for advancing the proceeding on behalf of the class and of notifying class members of the proceeding; and
    • does not have, on the common issues for the class, conflicting interests with other class members.

Immunity and leniency

Immunity and leniency programmes

Is an immunity and leniency programme available for companies? If so, how does it operate?

Yes, there is an immunity programme and leniency programme available to companies and individuals. In the context of Canadian competition law, conceptually, immunity and leniency are treated differently. ‘Immunity’ refers to complete immunity from prosecution (ie, no criminal charges are laid), whereas ‘leniency’ refers to lenient or more favourable treatment (eg, reduced penalties) in return for a guilty plea and cooperation.

Can the enforcement authority decline or withdraw leniency? If so, on what basis?

Yes. If a proffer is not completed within 30 calendar days from the date of the marker, and if no extension has been granted, or where the Competition Bureau is informed by the Public Prosecution Service of Canada (PPSC) that plea discussions are terminated because the parties are unable to reach an agreement, the bureau may cancel the leniency applicant’s marker.

Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?

Cooperating parties who do not qualify for the bureau’s immunity programme may qualify for the leniency programme, which may lead to a more favourable treatment.

What benefits (if any) are available for employees and former employees of a company that seeks leniency?

The employees of a company that receives first leniency and who cooperate with the investigation in a full and timely fashion will benefit from a recommendation that no separate charges be laid against them. The employees and former employees of a company that receives second leniency may be charged depending on their role in the offence. Employees and former employees who are charged but who cooperate fully may be eligible to receive a lenient treatment recommendation from the bureau.

Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?

If a company qualifies for immunity, all directors, officers and employees who admit their involvement in the illegal anticompetitive activity as part of the corporate admission, and who provide complete, timely and ongoing cooperation, will also typically qualify for the same recommendation for immunity. Former directors, officers and employees who offer to cooperate with the bureau’s investigation may also qualify for immunity, although such determination is made on a case-by-case basis.

The application of the leniency programme described above also applies to individuals.

Have there been any notable recent cases in which a leniency application was the subject of adjudication?

There have been cases that have discussed the bureau’s immunity and leniency programmes (eg, Maxzone). However, no recent case has evaluated these programmes.

Criminal liability

Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?

Under the immunity programme, a party implicated in activity in contravention of any of the criminal provisions of the act may apply for immunity. While the application for immunity is made to the bureau, the bureau only makes a recommendation to the PPSC that immunity be granted. Ultimately, it is the PPSC that will grant the immunity.

Under its immunity programme, the bureau may recommend a grant of immunity where the bureau: 

  • is unaware of an offence in relation to a particular product or service, and the party is the first to disclose it; or
  • is aware of an offence and the party is the first to come forward, before there is enough evidence to warrant a referral of the matter to the director of public prosecutions (DPP).

Further, in order to qualify for immunity, generally an applicant must:

  • be the first to disclose the illegal activity to the bureau;
  • terminate its participation in the illegal activity;
  • not have coerced others to be party to the illegal activity; and
  • cooperate in a timely manner, at its own expense, with the bureau’s investigation and any subsequent prosecution by the DPP of other cartel participants.

Application procedure

What is the procedure for a leniency application?

The bureau’s Bulletin on the Leniency Programme and its accompanying frequently asked questions page articulate its policy and enforcement approach in respect of leniency and sentencing. As with the case of immunity, the bureau can only recommend that leniency be granted. The decision rests with the PPSC.

Where the party under investigation cannot take advantage of the immunity programme, for example because it is not the first to disclose the illegal conduct to the bureau, it may be possible to seek leniency. In order to qualify for leniency, an applicant must:

  • terminate its participation in the illegal conduct;
  • agree to cooperate fully and in a timely manner, at its own expense, with the bureau’s investigation and any subsequent prosecution by the DPP of other cartel participants; and
  • agree to plead guilty.

The procedure for a leniency application includes the following steps. The first is known as the ‘marker stage’, where a person seeking leniency contacts the bureau to ask about the availability of a marker. Where leniency is available, the bureau will advise the applicant of its place in the marker queue. A leniency applicant who receives a marker will be allowed a fixed amount of time to confirm its intention to participate in the leniency programme (typically four business days). During this time the marker holds the applicant’s position in the queue. 

After being granted a marker, an applicant must provide the bureau with a statement known as a proffer. During a proffer, an applicant is expected to reveal its identity and describe in detail the anti-competitive activity, including:

  • the participants to the offence;
  • the nature of the agreement;
  • the affected volume of commerce in Canada (direct and indirect); and
  • any other factors relevant to culpability.

The bureau expects an applicant to complete its proffer within 30 calendar days after the leniency marker is granted, unless otherwise extended. The bureau will use the information provided to it during the proffer when developing its lenient treatment recommendation to the PPSC. When developing its recommendation, the bureau’s starting point involves calculating a proxy of 20% of the leniency applicant’s volume of affected commerce in Canada throughout the duration of the offence. Thereafter, the bureau will weigh any aggravating and mitigating factors. The bureau would then apply the leniency discount, the quantum of which would depend on the applicant’s position in the leniency queue.

Following the bureau’s recommendation, the PPSC will decide if it will enter into a plea agreement with the leniency applicant and recommend leniency to the court. The PPSC will typically lead plea negotiations with the leniency applicant regarding the form and content of a plea agreement and the ultimate fine that the leniency applicant would pay. The guilty plea and sentencing hearing before the court would take place following the execution of the plea agreement.  

What is the typical timeframe for consideration of a leniency application?

A leniency applicant which receives a marker will be allowed four days to confirm its intention to participate in the programme. During this time, the marker holds the applicant’s specific place in the queue. Once participation in the programme is confirmed, the applicant will have 30 calendar days during which to complete its proffer to the bureau. As a practical matter, complex leniency applications can take many months to complete.

What information and evidence is required?

The leniency applicant must reveal its identity and describe in detail the anti-competitive activity, including:

  • the participants to the offence;
  • the nature of the agreement;
  • the affected volume of commerce in Canada; and
  • any other factors relevant to culpability.

What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?

No information or evidence is generally disclosed to subjects of the investigation at the immunity or leniency application stage. If a charge(s) and a criminal proceeding ensues, the crown is obliged to disclose to all accused all of the relevant, non-privileged information in its possession, which may include information and evidence gathered by the bureau pursuant to its immunity and leniency programmes.

What level of cooperation is required from applicants?

Applicants must cooperate fully, in a timely manner and at their own expense. See “What is the procedure for a leniency application?” above.

What confidentiality protection is offered to applicants?

In conformity with Section 29 of the act, the bureau’s confidentiality policy treats the identity of an immunity and a leniency applicant confidential, except where:

  • disclosure is required by law;
  • disclosure is necessary to obtain or maintain the validity of a judicial authorisation for the exercise of investigative powers;
  • disclosure is for the purpose of securing the assistance of a Canadian law enforcement agency in the exercise of investigative powers;
  • the party has agreed to disclose;
  • there has been public disclosure by the party; or
  • disclosure is necessary to prevent the commission of a serious offence.

The bureau will keep the information provided by an immunity or leniency applicant confidential, subject to the above exceptions plus where disclosure of such information is for the purpose of the administration or enforcement of the act.

All information provided by a leniency applicant up until the plea agreement is concluded is treated as confidential, except where the information is required to be provided to the court as part of the bureau’s obligation to provide full and frank disclosure in making applications to the court, such as for search warrants or production orders.

Can the company apply for a marker? If so, under which conditions?

Yes. An applicant can make its initial contact with the bureau on the basis of a limited hypothetical disclosure that identifies the nature of the criminal offence it has committed regarding a specified product in order to secure a marker. The hypothetical disclosure must contain sufficient detail. Where immunity or leniency is available, the bureau will advise the applicant of its place in the marker queue. An applicant who receives a marker will be allowed a fixed amount of time to confirm its intention to participate in the programme (typically four business days). During this time the marker will hold the applicant’s position in the queue.