Canada: Updated Canadian Cartel Immunity And Leniency Program

An updated cartel immunity and leniency program (the "Program") has been issued in Canada. Key takeaways for businesses and international practitioners are as follows:

  • Under the Program, companies and individuals that self-report unlawful conduct (e.g., cartels) in Canada can benefit from (i) immunity from prosecution or (ii) leniency in the form of a significant reduction in the amount of the recommended fine.
  • While the process of applying for immunity or leniency can be "paperless", the Canadian Competition Bureau (the "Bureau") may record witness interviews. Plaintiffs might seek disclosure of these recordings from the Bureau in follow-on litigation.
  • A final grant of immunity may be delayed until long after an applicant has provided full cooperation.
  • Applicants should carefully assess how the operation of the Program – including with respect to waivers and the timing of obligations – interacts with the operation of immunity and leniency programs in other jurisdictions.

Background

The Commissioner of Competition, who is the head of the Bureau, is responsible administering and enforcing of Canada's Competition Act (the "Act"), including its criminal cartel provisions. After investigating a cartel, the Bureau may recommend to the Director of Public Prosecutions (DPP) that a defendant be charged criminally. The DPP makes the final determination whether to file charges against a defendant. If charges are filed, the DPP must prove to a court the defendant's guilt beyond a reasonable doubt.

The Program provides companies and individuals that have engaged in criminal activity incentives to self-report to the Bureau; such self-reporting helps the Bureau detect and investigate cartels.

In the past few years, the DPP was unsuccessful in high profile cartel cases in court and declined to prosecute another high profile cartel. These outcomes were attributed to perceived shortcomings with the prior version of the Program; among other things, there was concern that applicants under the Program (the "Applicants") were not compelled to continue their cooperation until trial. This updated version of the Program, issued by both the Bureau and the DPP, is designed to address these perceived shortcomings.

Immunity and Leniency Process

The process for applying for immunity or leniency is complex. Importantly, the application process can be paperless, but the Bureau may seek to audio or video record the interviews of an Applicant's witnesses. Set out below is a chart detailing the main procedural steps for companies applying under the Program. Participation in the immunity and leniency processes requires careful strategic decision-making by Applicants at every stage (particularly for Applicants seeking immunity or leniency in other jurisdictions simultaneously).

Fine Calculation for Leniency Applicants

Under the Program, immunity Applicants are not subject to criminal conviction or any type of state sanction (although immunity Applicants may be subject to civil damages actions).

Leniency Applicants, by contrast, are expected to plead guilty and have a sentence entered by a court (leniency Applicants may also be subject to civil damages actions). Under the Program, the DPP and the Applicant will submit a recommended sentence to the court, which is calculated by determining the base fine, taking account of aggravating and mitigating factors, and then subtracting credits and discounts based on participation in the Program.

  • Base Fine. The "base fine" is calculated as a percentage of the affected volume of commerce in Canada. The Bureau will use 10% as a proxy for the overcharge, but will also consider evidence that a lower overcharge is appropriate. Added to this amount is an additional 10% for deterrence and to ensure the fine is not a mere cost of doing business.
  • Plus Aggravating Factors. The amount of the base fine is increased if there exist aggravating factors, which can include recidivism; coercion or instigation; a large corporate size or market share; vulnerable nature of the victims; or a high level of senior officer involvement.
  • Minus Mitigating Factors. The base fine is decreased if there exist mitigating factors, which can include restitution of victims outside of civil damages suits; early termination of the unlawful conduct; a reduced ability to pay; or the existence of a compliance program that is credible, effective and consistent with the Bureau's Bulletin on Corporate Compliance Programs.
  • Minus Leniency Plus Credit. The base fine will be decreased by 5-10% if the Applicant provides evidence of further unlawful conduct (i.e., either a separate cartel, or unlawful conduct that is broader (e.g., longer) than previously known by the Bureau). The Applicant will receive immunity for that additional disclosure, and an additional reduction in the recommended fine for which the Applicant is receiving leniency.
  • Minus Leniency Discount. The fine will be discounted by up to 50%. The level of discount the DPP will agree to depends upon the value of the Applicant's cooperation to the Bureau's investigation, which is determined by reference to a number of factors: the timing of the application; the timeliness of the Applicant's disclosure; the availability, credibility and reliability of the Applicant's witnesses; and the relevance and materiality of evidence produced by the Applicant.

Employees

The Program also provides relief for individuals associated with immunity or leniency Applicants. The nature of that relief varies depending upon (i) the Applicant's status in the Program and (ii) the individual's status with the Applicant. The table below describes the different forms of relief offered to individuals associated with Applicants.

To be eligible to benefit from the Program, (i) an individual must admit knowledge of or participation in the cartel and be prepared to cooperate in a timely fashion with the Bureau's investigation, and (ii) Applicants must identify the individual to the Bureau. The Bureau will extend available relief to such individuals in all cases except where the individual will not admit her or his knowledge of or participation in the cartel, or fails to cooperate in the manner required.

Of Interest to International Practitioners

Aspects of the Program will be of particular interest to international practitioners. Notably:

  • Recordings / Potentially Discoverable Material. The Bureau will seek to interview the Applicant's witnesses (i.e., current and former employees). These interviews may be conducted under oath and video recorded; the purpose of recording is to impeach or cross-examine a witness if their court testimony is inconsistent with information previously provided. It is unclear whether or what legal privilege might protect such recordings, and there is a risk that plaintiffs might seek third party disclosure of such recordings from the Bureau in follow-on litigation.
  • Applications in Other Jurisdictions. The Program requires that at the proffer stage, absent compelling reasons, an Applicant identify all of the other jurisdictions where the Applicant is applying for immunity or leniency.
  • Waivers. The Program provides that the Bureau expects that Applicants, absent compelling reasons, will provide waivers of confidentiality "immediately" to permit the Bureau to communicate with agencies in other jurisdictions where the Applicant is applying for immunity or leniency.
  • Timing Considerations. The Program provides for an application process with numerous prescribed time periods. The Program warns that the Bureau will not delay operation of these time periods solely because an Applicant has commitments arising out of immunity or leniency applications in other jurisdictions.

Conclusion

The updated Program provides valuable incentives for parties to unlawful conduct to self-report, but the Program's operation is complex and requires careful strategic decision making by Applicants (particularly those whose conduct involves multiple jurisdictions).

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions