Canada: Competition Bureau Releases Draft Bulletin On Sentencing In Cartel Cases

On April 28th, 2008 the Competition Bureau released for public consultation its draft Information Bulletin on sentencing and leniency recommendations in cartel cases. The Bulletin had been anticipated as a component of the Bureau's revised immunity program, that was released on October 11, 2007. The Bureau aims to encourage early resolution of cases by offering leniency in the form of a 50% fine reduction and no sanctions against individuals for the first leniency applicant and lesser reductions for later applicants. Applicants for leniency will be required to provide full disclosure and material cooperation and could face disqualification if they fail to meet the program's requirements. While there remain areas of uncertainty, the Bulletin represents a good "first step" in providing a greater degree of predictability and transparency in resolving the Bureau's most significant criminal cases. Public commentary will be accepted until July 25th.

As outlined in the October 15, 2007 Osler Update, Competition Bureau's Revised Immunity Program Increases Clarity for Applicants companies that discover potential criminal antitrust conduct in their operations can benefit from an early approach to the Bureau. The Immunity Policy addresses those who are "first in line" and who will benefit from blanket immunity for both the corporation and current co-operating individuals. The draft Information Bulletin addresses situations where entities miss the "first in line" spot but may still want to minimize their ultimate exposure to stringent sanctions under Canadian antitrust law, which could include multi-million dollar fines and terms of imprisonment for executives.

The "cartel offences" covered by this policy are the standard antitrust conspiracy offence, foreign directives provision and bid-rigging prohibition under the Competition Act (the Act).

Information Bulletin Does Not Bind DPP

The Bulletin is solely a draft Bureau policy and does not seek to bind the (DPP) of the Public Prosecution Service of Canada. This independent agency has the sole authority to conduct criminal prosecutions at the federal level. While the Bureau will undoubtedly have consulted with the DPP in the preparation of its Bulletin, it remains to be seen whether the DPP will formally adopt the principles and practices set out in it. This is no minor consideration, given that prosecutors presently have a great deal of discretion in the operation of the criminal justice system. While they are bound to consider the opinions and policy positions of the regulatory agencies with whom they work, they will nonetheless make their own decisions on individual cases. The Bulletin also notes that that the courts obviously are not bound by the Bureau's policy or even a joint sentencing recommendation made by the DPP and an accused party's counsel, although Canadian courts rarely reject such petitions.

The Sentencing Formula

The Bureau's approach to sentencing is premised upon its observation that economic harm is the measure by which cartel fines should be determined. The Bureau relies on the "overcharge," defined as the "& the amount paid by consumers over and above what would have been paid in the absence of the cartel." Noting that quantifying the actual economic harm arising from cartel behaviour will be difficult in most cases, the Bureau sets out a "proxy" which is intended to be used for fine calculations. Then, it proposes a penalty formula which is the volume of commerce in Canada (VOC) affected by the cartel, multiplied by an overcharge factor. In turn, VOC is defined as the value of sales of the product in Canada that was the object of the anti-competitive agreement over the time period that the party participated in the offence. The Bulletin notes that, in circumstances where parties participate in a cartel by omission (i.e., by not directly participating in a given market, or by refraining from participating in a given market), the VOC of other cartel participants may be considered as the basis for the economic harm element in the fine calculation.

Interestingly, the Bureau observes that "in most cases" it will include only direct sales in Canada to determine VOC; however, it notes (perhaps provocatively) that it may also be appropriate to include indirect sales "to properly reflect the magnitude of the effects of the offence in Canada."

The Bureau postulates a standard overcharge multiplier of 20% and relies on the U.S. sentencing guidelines as a reference point for this baseline. There is room for adjustment in circumstances where the 20% "proxy" would either overstate or fail to capture the economic harm resulting from the cartel.

Considerations in Setting Fines

The Bureau sets out a number of aggravating and mitigating features that it proposes to take into account in setting the ultimate fine. Among the aggravating circumstances are:

  • recidivism;

  • the presence of coercion or instigation;

  • the presence of large market shares or corporate size;

  • the degree of planning, covertness, and complexity;

  • the presence of obstruction activities;

  • lengthy duration of the illegal activity;

  • vulnerable or governmental victims; and

  • the participation by senior officers of the corporation.

To balance these considerations, the Bureau would consider the following mitigating factors:

  • co-operation with authorities;

  • acceptance of responsibility; and

  • restitution for victims.

The Bulletin also refers to the possibility of imposing prohibition orders (authorized under section 34 of the Act) that could include prescriptive terms requiring positive steps such as implementing a corporate compliance program or notifying customers of the presence of the prohibition order.

The Bureau observes that criminal sanctions for individuals will be a significant deterrent for cartel conduct. In this regard, the Bulletin refers to factors such as whether the individual obtained personal profit from the offence or was sanctioned in another jurisdiction or punished in other ways arising from the cartel behaviour. The Bureau notes that imprisonment is likely to be reserved for the most serious violations where a more severe sentence may be indicated, such as where an individual was the primary instigator or leader of the cartel, used coercion or otherwise encouraged or monitored compliance with the illegal arrangement, obstructed the investigation or personally benefited from the unlawful conduct. However, where "mitigating factors" may be more persuasive, imprisonment will not normally be recommended.

Conditions for Eligibility

To qualify for leniency, the Bulletin stipulates the following:

A lenient treatment recommendation will be made to the DPP where charges are not yet laid and where the party:

  • terminates its participation in the illegal activity;

  • co-operates fully with the Bureau's investigation and any subsequent prosecution by the DPP; and

  • admits that it has engaged in the anti-competitive conduct which might constitute an offence under the Act and agrees, if charged, to plead guilty and be sentenced for its participation in the activity.

As for factors to be considered, the Bureau states that it will consider whether co-operation is timely (based on when cooperation actually commences), the value of the evidence, and whether the applicant can offer evidence of other unrelated cartel conduct.

Reduction of the Standard Sentence

The Bulletin indicates that, where the applicant meets its program requirements, the Bureau may recommend a reduction for the first leniency applicant of "up to 50% of the fine that would otherwise have been recommended," plus a recommendation that no charges be laid against the organization's current directors, officers or employees, provided that such personnel agree to co-operate with the Bureau's investigation. Exceptions may occur where individuals may have engaged in coercion, have had involvement in other cartel offences or have engaged in obstruction.

Later applicants in the process may be eligible for reductions of up to 30% of the fine that would have otherwise been recommended; however, leeway is allowed for parties who have evidence of "exceptional value" (i.e., greater than that of the first leniency applicant). Individuals may qualify for lenient treatment if they otherwise meet the ongoing requirements of the program, notwithstanding that the organization with which they are affiliated does not meet the criteria for lenient treatment.

Procedure for Leniency

To obtain leniency, a party may make a request to the Senior Deputy Commissioner of Competition, following which the applicant must provide a "proffer" on a "without prejudice" basis in which the applicant will describe in detail the activity for which leniency is sought and the potential effect in Canada. This procedure mirrors the immunity application process and requires completion of the proffer within 30 days "and potentially sooner." All such applications are to be kept confidential by the Bureau. The proffer must include a detailed description of the illegal activity, including the evidence or testimony potential witnesses may give, the nature of any records the applicant may provide, and an indication of the probative value of the proposed evidence. In this regard, the Bureau may request interviews with one or more witnesses to make an assessment of the application.

Once its assessment is made, the Bureau may give the DPP a similar overview of the witness evidence; but, the Bulletin notes that the DPP retains full discretion on whether they will accept the Bureau's recommendation. The Bureau also notes that a leniency applicant must provide "full, frank, and truthful disclosure" of all non-privileged information, records or things in its possession, under its control, or available to it, that in any manner relate to the anti-competitive conduct. The disclosure process should typically take place within a 6-month timeframe. Applicants must make no misrepresentation of any material facts and witnesses must be expected to testify in the ultimate court proceedings.

The Bulletin indicates that co-operation is an essential element of the program. Should an applicant fail to live up to its obligations, the Bureau will so indicate to the applicant and provide a 14-day notice period within which the applicant may remedy its non-co-operation, failing which leniency may be revoked. This, again, is similar to the immunity program.

The Bureau will make a final recommendation for leniency to the DPP when the applicant fulfils its continuing obligations to co-operate (including full, frank and truthful disclosure of the behaviour constituting the offence, together with an agreement to plead guilty to the offence).

Significance of Bulletin
The publication of this Bulletin represents a welcome development in the regulation of cartel activity by the Bureau. The Bulletin aims at providing incentives to parties involved in criminal antitrust investigations to resolve their cases early, and offers a degree of predictability and transparency for those that, for one reason or another, are unable to apply for immunity and may therefore wish to consider reduced penalties available through an application for leniency.

However, a number of considerations remain to be detailed and explored by the Bureau in working out its policy, including whether:

  • the DPP will ultimately accept the Bureau's policy and procedural framework for leniency;

  • the untested "overcharge" feature will be accepted by the courts;

  • the subjective elements within the policy will work well in practice and provide sufficient predictability; and

  • evidence and information obtained by the Bureau would be used against an applicant if the leniency application fails.

The fact that the Bureau has invited public consultation on the draft Information Bulletin will be well received. This will enable both the Bureau and the practising bar to have a dialogue on the most appropriate manner of ensuring both a predictable and transparent system that will serve both the administration of justice and provide the necessary incentives for parties to consider applications for leniency.

Graham Reynolds Q.C. is a partner in the firm's highly regarded Competition/Antitrust Law Group.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.