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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.

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