Welcome Back to McMillan's Canadian Cartel News. Following Volume 1's primer on Canada's anti-cartel legislation, Volume 3 provides an overview of the Canadian Competition Bureau's Immunity and Leniency programs.1
Like many of its counterparts around the world, the Canadian Competition Bureau (the "Bureau") has established immunity and leniency programs to encourage parties to admit their involvement in the commission of Competition Act offences and to cooperate in the subsequent prosecution of such offences. The Bureau has released an Immunity Program Bulletin as well as a Frequently Asked Questions document; In regard to its Leniency Program, it has also released a Leniency Program Bulletin and a Frequently Asked Questions document.
The Immunity Program allows for immunity from criminal prosecutions to be granted to a party who has committed a Competition Act offence, on the condition that this party is the first person to report the matter to the Bureau and that the person assists the Bureau by providing information for use in prosecuting others that were involved in the same offence. To receive immunity, the applicant must either have disclosed an offence to the Bureau of which the Bureau was not previously aware, or the applicant must be the first to come forward to the Bureau before the Bureau has sufficient evidence to recommend that the matter be prosecuted. The successful applicant receives immunity from prosecutions for itself and its employees, officers and directors. Of note, the Bureau does not give any special treatment or consideration to a party because it has been granted immunity or favourable treatment in another jurisdiction. To be the successful Immunity applicant in Canada, the party must be the first to report the offence to the Bureau.
The Leniency Program offers favourable treatment to subsequent parties that come forward and cooperate with the Bureau in its prosecution of Competition Act offences. The first leniency applicant will typically receive a significantly reduced fine (typically a 50% reduction), as well as immunity for its employees, officers and directors. As well, if the Immunity applicant is unable to fulfill the requirements of the Immunity Program, the first Leniency Program applicant will be able to request immunity. Subsequent leniency applicants will receive lesser reductions in fines, and its personnel are not guaranteed full immunity, but the corporate penalties are less than they otherwise would have been, had the party not come forward and cooperated. Moreover, a Leniency Program applicant may be able to receive a further reduction in its fine amount for its leniency-related offence if it also reports to the Bureau information concerning additional Competition Act offences that qualify for the Immunity Program (known as "Immunity Plus").
As noted in Volume 2 of Canadian Cartel News, the Competition Bureau has proposed an additional reduction in fines, or other preferential treatment, for a leniency applicant that has an effective corporate compliance program, even though the program may not have prevented the commission of the offence.
Together, the Immunity and Leniency Programs offer tiered benefits to parties that report their unlawful antitrust conduct to the Bureau. The first party to successfully report an offence is granted immunity, which of course is significantly better than being the first successful Leniency applicant. Correspondingly, the first Leniency applicant is significantly better off than the second Leniency applicant. This trend continues all the way down the ladder, and thereby creates strong incentives for parties to report their misconduct as soon as possible. The structure of these programs has proven very successful in alerting the Bureau to Competition Act offences. An applicant seeking to obtain immunity or leniency will seek to obtain a "marker" from the Bureau to secure its place in the queue. Certain information will need to be provided, usually through a hypothetical disclosure, in order to learn whether the Bureau is already investigating the matter at issue. Once the Bureau has confirmed an applicant's participation in the Immunity or Leniency Program, the Bureau will require the applicant to perfect its marker by providing a proffer, typically within thirty days. If the applicant requires more than thirty days, it is incumbent upon the applicant to request an extension from the Bureau. If no extension is requested or if none is granted, the marker will expire after thirty days.
In the proffer, the applicant should provide a detailed description of the illegal activity and should disclose sufficient information for the Bureau to determine whether the party can qualify for immunity or leniency. The Bureau may request the opportunity to view certain documents or even request that it interview one or more witnesses before making a decision as to whether it will recommend immunity or leniency. Following the Bureau's recommendation, the Director of Public Prosecutions (DPP) will exercise its independent discretion in determining whether the party is awarded immunity from prosecution or leniency. If the DPP accepts the Bureau's recommendation, the DPP will execute an immunity or leniency agreement with the applicant that stipulates the applicant's ongoing obligations. These obligations include the requirement to provide full, complete, frank and truthful disclosure of all nonprivileged information, evidence and records in the applicant's possession and control as well as for the applicant to cooperate with the investigation and ensuing prosecution(s).
There is an interplay between the Immunity Program, the Leniency Program, and federal government procurement. Public Works and Government Services Canada ("PWGSC"), the body that manages the overwhelming majority of federal government procurements in Canada, has established rules that prohibit persons who have been convicted of or who have received conditional or absolute discharges for certain offences from bidding on any federal government contracts. A number of Competition Act offences are included within these listed offences, including cartel offences, bid-rigging offences and false or misleading representation offences. Historically, successful leniency applicants were exempted from compliance with these PWGSC provisions. However, as of November 2012, Leniency Program applicants are no longer exempted from these provisions and thus are restricted from participating in government contracts following a conviction. Successful immunity applicants remain exempted, because they have not been convicted of anything.
Of course, even if a party succeeds in obtaining immunity from prosecution or leniency, the party will still be subject to claims for civil damages: With respect to class actions, we hope that you return in two weeks – or so – for our brief overview of the Canadian Class Action system