This past spring, Canada's Commissioner of Competition, John Pecman, announced the launch of the Competition Bureau's Criminal Cartel Whistleblowing Initiative (the "Initiative"), aimed at creating awareness of underused whistleblower protections in Canada's Competition Act (the "Act"). This is but one initiative in the Bureau's arsenal of programs aimed at cracking down on cartels and collusive activity. The Initiative complements the Immunity and Leniency Programs, which have been credited for helping the Bureau in its enforcement activities in Canada.
As is further described in this newsletter, the whistleblower program:
- encourages employees, customers, and suppliers to notify the Bureau where they have reasonable grounds to believe that a person has committed, or intends to commit, a criminal offence under the Act;
- assures whistleblowers that the Bureau will keep their identity confidential and that any information that is communicated to other law enforcement agencies does not reveal the identity of the whistleblower; and
- protects whistleblower employees from employer reprisal.
The Whistleblowing Initiative: An Overview
Although the Bureau launched the Initiative in May 2013, it does not mark the creation of a new substantive regime. Provisions protecting whistleblowers have existed in the Act – and have seemingly been overlooked – since 1999.
The Initiative highlights for the public the existence of these underused provisions and encourages the public to provide information regarding possible criminal cartel activity. In so doing, the Initiative signals the Bureau's intention to continue its trend of increasingly vigorous enforcement of the Act's anti-cartel provisions.
Under the whistleblower program, anyone who has reasonable grounds to believe that a person has committed, or intends to commit, a criminal offence under the Act may notify the Bureau of the particulars of the matter and may request that his or her identity be kept confidential.
The Bureau will keep confidential the identity of the whistleblower and will ensure that any information provided by a whistleblower that is communicated to other law enforcement agencies does not reveal the whistleblower's identity.
While the Act's provisions protect whistleblowers reporting any "offence" under the Act, the Initiative is focused on collusive behaviour contrary to sections 45-49 of the Act. Sections 45-49 of the Act prohibit, among other things:
- agreements or arrangements between competitors to fix prices, allocate markets, or restrict output;
- conspiracies relating to professional sport; and
- agreements or arrangements of federal financial institutions.
Filling in the Gaps: Picking Up Where the Immunity and Leniency Programs Leave Off
The Initiative complements the Bureau's Immunity and Leniency Programs, broadening the avenues through which the Bureau may become aware of anti-competitive activity. Readers may already be familiar with the Immunity and Leniency Programs:1
- The Immunity Program, which the Bureau states has proven to be its single most powerful means of detecting criminal anti-competitive activities, offers a party implicated in criminal anti-competitive activity the opportunity to request immunity from prosecution under the Act by cooperating with the Bureau. To be granted such immunity, the party must be the first to disclose the existence of an offence to the Bureau, or must be the first to provide evidence leading to the filing of charges.
- Where a party is not the first to disclose or provide evidence of a criminal anti-competitive activity, but admits its role in the cartel activity and cooperates with the Bureau, the Bureau may recommend leniency in sentencing under the Leniency Program.
The Initiative targets a demographic not covered by the Immunity or Leniency Programs: persons who are not engaged in anti-competitive behaviour themselves, but who have become aware of possible violations of the criminal cartel provisions of the Act. This could include employees, customers, and suppliers who are unconnected to the anti-competitive activity.
If the Initiative is successful, the Bureau will likely receive increased information from whistleblowers. A robust whistleblower program may also see increased use of the Immunity and Leniency Programs: companies may be motivated to engage the Immunity and Leniency Programs before losing the potential benefit of these programs through pre-emptive disclosure of information by a whistleblower.
Your Secret's Safe with the Bureau: Whistleblower Protections in the Competition Act
While the Initiative does not add to or enhance the whistleblower provisions already contained in the Act, the Bureau is pushing to educate the public about the strong protections afforded to whistleblowers to encourage people to come forward with information without fear of reprisal.
The whistleblower protection regime is found in sections 66.1 and 66.2 of the Act. The fact that these provisions have received little attention from the Bureau to date may be a result of their origins – the provisions, enacted in 1999, were not proposed by the Bureau, but by individual members of Parliament.
Subsection 66.1(1) of the Act provides that any person who has reasonable grounds to believe that a person has committed or intends to commit an offence under the Act may notify the Commissioner of the particulars of the matter and may request that his or her identity be kept confidential with respect to the notification.
Subsection 66.1(2) provides that the Commissioner will keep confidential the identity of a person who has notified the Commissioner under subsection 66.1(1) and to whom an assurance of confidentiality has been provided by any person who performs duties or functions in the administration or enforcement of the Act.
In addition, the Bureau must comply with section 29 of the Act, which deals with the treatment of confidential information in the possession of the Bureau, when communicating confidential information provided by a whistleblower. Under this section, the Bureau may only communicate confidential information to a Canadian law enforcement agency or for the purposes of the administration or enforcement of the Act, if the information has been made public, or if the communication is authorized by the person who provided the information.
The key provision for an individual contemplating blowing the whistle on her employer's anti-competitive activity – and the provision that differentiates Canada's whistleblower regime from those in the US, UK, and Europe – is section 66.2. Section 66.2 prohibits employers from retaliating against a whistleblower employee. The section provides that no employer shall dismiss, suspend, demote, discipline, harass or otherwise disadvantage an employee, or deny an employee a benefit of employment, by reason that the employee, acting in good faith and on the basis of reasonable belief, has disclosed to the Commissioner that the employer or any other person has committed or intends to commit an offence under the Act. These protections encompass the independent contractor employment relationship.
Similar employee protections exist in the Criminal Code, which provides that it is an offence for an employer to retaliate, or threaten to retaliate, against an employee who has provided or will provide information to a person whose duties include the enforcement of federal law. The maximum penalty for an employer who commits such an offence is imprisonment for a term not exceeding five years.
Whistleblowers Beware: Protections Aren't This Strong Everywhere
While the US Department of Justice Antitrust Division has leniency policies similar to Canada's Immunity and Leniency Programs (providing immunity from criminal prosecution to corporations and individuals who meet certain requirements), there are currently no provisions in force to protect individual whistleblowers from retaliatory measures by their employers.
Following a Government Accountability Office 2011 report supporting whistleblower protection, whistleblower legislation was recently reintroduced in Congress and referred to a Congressional committee on January 22, 2013. The bill, the Criminal Antitrust Anti-Retaliation Act of 2013, would amend the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 to extend whistleblower protections to employees who provide information to federal prosecutors relating to what they reasonably believe to be a violation of antitrust laws.
The provisions are modeled on those in the Sarbanes-Oxley Act of 2002, which protects employees of publicly traded companies who report certain allegations of corporate misconduct. The proposed whistleblower provisions focus on protection from employer discipline for employee whistleblowers – even those who participated in a cartel. Only an employee who had planned and initiated the criminal violation would be ineligible for protection.
In addition to its leniency policy, the UK Office of Fair Trading ("OFT") operates a confidential whistleblower program that offers financial rewards of up to £100,000 for information about cartel activity. The OFT assures whistleblowers that their identity will be protected from disclosure. However, the OFT does not guarantee protection for employees from retaliatory measures by an employer and suggests that potential whistleblowers seek legal advice where their employment may be at risk.
The European Commission also has a leniency policy similar to Canada's but, like the UK, it does not currently protect whistleblowers from employer reprisals. Under the Commission's leniency policy, a company may obtain total immunity in two situations:
1. Where it is the first to inform the Commission of an undetected cartel by providing sufficient information to allow the Commission to inspect the premises of the companies allegedly involved; or
2. Where the Commission already has enough information to launch an inspection, but the company provides evidence that enables the Commission to prove the cartel infringement.
Companies that do not qualify for total immunity may still obtain leniency in the form of reduced fines if they provide evidence that represents "significant added value" to the evidence already in the Commission's possession and if they terminate their participation in the cartel.
The Future: Financial Incentives?
One controversial question that remains is whether the Bureau will consider financial incentives for whistleblowers, in the vein of the OFT's financial rewards. Similar proposals are being considered in the securities context by the Ontario Securities Commission. There is active debate in the US regarding the value of adding a whistleblower rewards provision, with proponents arguing that the current regime does not offer enough incentives to whistleblowers who are not themselves involved in anti-competitive offences. Opponents are concerned by the potential for fraudulent claims and the undermining of internal compliance programs. With increased attention to the Act's whistleblower provisions, we may soon see debate on this issue in Canada's competition milieu.
1 For more information, see Nikiforos Iatrou & Mandy Seidenberg, "Competition, Cartels and Canada – Courts are Putting Leniency Agreements at Risk" Today's General Counsel (20 March 2013) online: http://www.weirfoulds.com/3454
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.