On July 3, 2015, the Government of Canada announced changes to its Integrity Regime for
suppliers. Under the existing regime, suppliers convicted of
certain offences, including Competition Act offences such
as price-fixing and bid-rigging, were automatically disqualified
from government supply contracts. The disqualification applied
broadly: even affiliates of a convicted supplier faced automatic
Of the several changes, two are particularly relevant for
suppliers in the context of offences under the Competition
Increased Attractiveness of the Bureau’s Leniency
Program: The Competition Bureau’s Leniency Program
offers significant fine reductions in exchange for cooperation and
a guilty plea. However, long-term disqualification from government
contracts may discourage some suppliers from admitting guilt and
thus may reduce participation in and the effectiveness of the
Bureau’s Leniency Program. The July 3 changes do not
eliminate disqualification for leniency applicants but they do
significantly shorten its duration. Suppliers can reduce their
period of disqualification from ten years to five years if they
cooperate with the authorities and take remedial action. Thus, at
least in the case of Competition Act offences, if a
supplier participates in the Bureau’s Leniency Program, it
will likely cut its disqualification period in half. While not as
attractive as a complete reprieve from disqualification, such a
significant reduction to the disqualification period for leniency
applicants should increase the Program’s attractiveness.
Protection for Innocent Affiliates: Under the
old Integrity Regime, conviction of a foreign affiliate for certain
foreign antitrust offences could disqualify a supplier even if the
supplier had no control over the foreign affiliate and was not
involved in the foreign conduct. Going forward, the government will
not automatically disqualify a supplier unless that supplier had a
degree of control over the convicted affiliate. Given that many
recent Competition Act convictions have involved foreign,
not Canadian, corporations, the July 3 changes should insulate many
Canadian subsidiaries from disqualification.
It is important to note that the July 3 changes do not apply to
provincial and municipal procurement rules which still apply to
contracts with those levels of government.
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.
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