In a speech earlier today, the new Interim Commissioner of Competition, John Pecman, in his first published remarks as Commissioner, discussed compliance, current Bureau enforcement policies and ongoing cases.
Some of the noteworthy aspects of the Interim Commissioner’s remarks include highlighting the Bureau’s continued enforcement in key areas (notably criminal cartel enforcement, including its Immunity and Leniency Programs, and abuse of dominance), highlighting the recent signals in the Maxzone case that the Federal Court will take a stricter approach to sentencing in cartel matters, and in particular compliance programs urging Canadian companies to adopt compliance programs (and discussing the risk and reputational benefits of adopting a credible program).
Compliance
Given that this speech was Mr. Pecman’s first official one as Commissioner, and delivered at a national law firm seminar for firm clients, it is perhaps not surprising that his remarks focused on compliance:
“… the Bureau promotes compliance through enforcement and it provides the education and the tools that assist the corporate community in developing corporate compliance programs. We all know businesses and individuals have a duty to act lawfully — and, the Bureau expects that businesses and their senior management, on the whole, want to comply with the law. It is our hope that by now, it is clear that the legal, economic and reputational risks of non-compliance far outweigh any perceived advantages. Non-compliance costs businesses dearly – not just in terms of financial and legal penalties, but through negative publicity, loss of business opportunities and lost management time. While I suspect that you recognize the value of a compliance program and that many of you have clearly established compliance policies that identify and address questionable behaviour — and aim to prevent it from occurring in the first place, let me take a few minutes to expand on the benefits of such a program.”
The Commissioner reiterated the five elements that are in the Bureau’s view necessary for an effective compliance program: senior management involvement and support; compliance policies and procedures; training and education; monitoring, auditing and reporting mechanisms; and consistent disciplinary procedures and incentives.
Some of the specific compliance themes the Commissioner discussed included compliance programs that are not followed, the importance of senior management promotion of compliance policies and monitoring and internal power to enforce policies. The Commissioner was particularly critical of compliance programs that were well prepared but not followed or effectively delivered. In this regard, the Interim Commissioner said that “the issue is not [a compliance program’s] content, or [its] quality – the issue is internal enforcement …”
Trade Association Compliance
Interestingly, the Interim Commissioner also made a number of specific remarks relating to trade associations. These included highlighting the particular potential risks of associations (saying that associations face “unique compliance issues” and are “naturally exposed to greater risks of anti-competitive behavior”) and emphasizing the importance for associations to have effective compliance programs.
The Interim Commissioner also said that the Bureau would be likely to show an interest in trade association conduct where they engaged in three categories of conduct: (i) restricting the types of professional service practice offerings (e.g., setting limits on things like office location or size); (ii) limiting the number or range of members’ ability to compete (e.g., through mandatory or suggested fee schedules or product standards); or (iii) conduct that reduces incentives to compete vigorously (e.g., information sharing agreements and the exchange of competitively sensitive information).
In addition to making the somewhat perennial recommendation for associations to adopt credible and effective corporate compliance programs, other specific suggestions for associations made by the Interim Commissioner for associations included taking precautions for the exchange of competitively sensitive information, precautions for association and board meetings (e.g., accurate minutes) and finding alternatives to voluntary fee guidelines.
Competition Bureau Immunity and Leniency Programs & Individual Liability
In addition to recent cases, compliance and trade associations, the Interim Commissioner also discussed the requirements of the Bureau’s Immunity and Leniency Programs, suggesting that the recently stricter approach to joint sentencing submissions adopted by the Federal Court in the Maxzone case has not impacted Bureau leniency applications.
There has been some recent debate following the Maxzone decision as to whether the Chief Justice’s indications that joint sentencing submissions would not necessarily be rubber-stamped (or that individuals not “first in” to the Bureau’s Immunity Program should necessarily be shielded from personal liability – i.e., imprisonment) might dampen leniency applications.
The Interim Commissioner also indicated that there may be greater individual liability (i.e., imprisonment risk) as a result of the Bureau’s continued focus on criminal enforcement and the Maxzone decision. However, as other commentators have quite rightly observed, given the Bureau’s reliance on its Immunity and Leniency Programs to detect cartels and other criminal competition conduct, it is not clear whether such warnings will practically translate into increased risk of “real jail time” either sought by the Bureau or imposed by the courts. In this regard, Canada has for a long time been a settlement focused jurisdiction, which not only has not seen the magnitude of “real jail time” as the U.S. but actual incarceration in Canada still remains rare (with the exception of some deceptive marketing, fraud and deceptive telemarketing cases).
Having said that, the interplay between immunity/leniency applicants, the Bureau, the Public Prosecution Service (i.e., Crown) and the Courts can be complex, particularly in relation to negotiated immunity agreements and joint sentencing submissions. This includes an obvious incentive by the Bureau to both signal the dangers of involvement in cartel and other criminal competition behavior to bring immunity/leniency applicants forward, while also practically enabling (and convincing) cartel participants to come forward and cooperate without their directors and officers being imprisoned.
For a copy of the Interim Commissioner of Competition’s speech see: Remarks by John Pecman, Interim Commissioner of Competition.
For more information on Canadian conspiracy laws, trade associations and competition law and the Bureau’s Immunity and Leniency Programs see: Conspiracy (Cartels), Associations & Competition Law and Immunity & Leniency.
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