A Q&A guide to cartel leniency law in Canada.
The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, whether immunity from civil fines is available for individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.
To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-mjg.
For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/competition-mjg.
Canada operates an immunity programme applying to the first party to disclose a criminal offence under the Competition Act, the terms and conditions of which are set out in:
Immunity Program under the Competition Act (Immunity Bulletin), June 2010.
Immunity Program Responses to Frequently Asked Questions (FAQ Bulletin), a supplement to the Bulletin.
Adjustments to the Immunity Program Background Paper (Adjustments Paper), outlining the Bureau's response to consultations on immunity programme changes.
Certain documents published by the Director of Public Prosecutions (DPP), including immunity agreement templates.
The Competition Bureau has also developed a formal leniency programme with decreasing levels of criminal fine reductions for subsequent applicants implicated in cartel offences. In September 2010, the Bureau published a Bulletin on the Leniency Program and Leniency Program FAQs (Leniency Program Bulletin), which describes the leniency programme for cartel cases and is intended to complement the immunity programme. The Leniency Program Bulletin sets out two conditions for leniency (both of which must be met), which are similar to those under the Immunity Bulletin:
The party must have terminated its participation in the conduct.
The party must provide complete and timely co-operation in the Bureau's investigation and the Attorney General's prosecution of others.
The Leniency Program Bulletin also outlines the factors the Bureau considers when making sentencing recommendations to the DPP, and the process for seeking a leniency recommendation. The publication of a sample template plea agreement by the Public Prosecution Service of Canada (PPSC) is forthcoming and will be available on the PPSC website.
The Bureau is a government agency that investigates criminal anti-competitive conduct (see box, The regulatory authority). The Attorney General, through the DPP, enforces criminal violations in the courts.
Only the DPP can grant immunity to a party implicated in an offence under the Competition Act. The Commissioner of Competition (Commissioner), who is the administrative head of the Bureau, determines whether the immunity programme conditions are met and makes a recommendation to the DPP. The DPP then considers whether it is in the public interest to grant immunity (Immunity Bulletin). For leniency, the Commissioner can only make recommendations to the DPP. The DPP has independent discretion to accept or reject such recommendations and the courts are ultimately responsible for sentencing following conviction (Leniency Program Bulletin).
In May 2010, the Commissioner and the DPP signed a Memorandum of Understanding (MOU) in relation to the investigation and prosecution of offences under the Competition Act, as well as the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act. The MOU is intended to provide greater transparency and predictability in the relationship between the Bureau and the PPSC, setting out the guiding principles of the relationship and outlining each organisation's respective roles and responsibilities in investigations and prosecutions.
See above, Applicable laws and guidance.
Immunity is only available for criminal offences prohibited under Part VI of the Competition Act. These include the following, each of which is punishable by fines and/or imprisonment:
Conspiracies between competitors or potential competitors to fix prices, allocate markets or restrict output. Significant amendments to section 45 of the Competition Act (concerning conspiracy) came into force on 12 March 2010.
Certain false or misleading representations and deceptive marketing practices.
The Leniency Program Bulletin applies to criminal cartel offences under the Competition Act, including conspiracy and bid-rigging.
Immunity and leniency applications are confidential. Immunity applications are only disclosed where disputed charges are laid against other cartel participants if the immunity applicant has provided evidence (see Question 14, Identity disclosure). From 2000 to 2005, the Bureau received over 35 immunity applications relating to over 40 different products. See Question 10.
Full immunity is only available to the first party to report criminal conduct prohibited by Part VI of the Competition Act (see Question 2 and Question 7, Circumstances). There is no immunity from civil claims or administrative orders or penalties.
There is no immunity or leniency from civil claims or administrative orders or penalties.
Immunity or leniency for individuals is only available for criminal conduct (see Question 7, Proceedings against individuals).
Immunity. Immunity is only available to the first party to disclose criminal conduct under Part VI of the Act. For immunity to be available, the Bureau must be unaware of the conduct, or have insufficient evidence to refer the conduct to the DPP for prosecution (Immunity Bulletin).
Where immunity is available, it is conditional on the applicant (in relation to corporations, its directors, officers and employees) providing full disclosure and co-operation. This is a single-step conditional process (Adjustments Paper).
Before a recommendation for immunity is made, the Bureau must be satisfied that the applicant has met, or is prepared to meet, the following conditions:
The applicant ceases its participation in the illegal activity.
The applicant must not have coerced others to take part in the illegal activity (this replaces a previous requirement that the applicant had not led or instigated the activity) (Adjustments Paper).
The applicant is not the only party to the activity.
Complete, timely and ongoing co-operation is provided during the Bureau's investigation and subsequent prosecutions, including:
providing details to the Bureau and DPP of all conduct of which the applicant is aware, or becomes aware, that may constitute an offence under the Competition Act and in which it may have been involved;
providing full, complete, frank and truthful disclosure of all non-privileged information within its possession or available to it, wherever located, that relates to the anti-competitive conduct for which immunity is sought. There must be no misrepresentation of any material facts;
for a corporation, facilitating the ability of current and former directors, officers and employees, and agents to appear for interviews and provide testimony;
non-disclosure of an application for a marker (see Question 9, Markers) or subsequent grant of immunity (unless required to by law, for which consultation with the Bureau and the DPP is required).
Co-operation with the Bureau's investigation is at the applicant's expense.
Leniency. Where immunity is unavailable, the Bureau may recommend that the DPP consider some form of leniency for co-operating parties who have breached the Competition Act's cartel provisions. The Bureau makes leniency recommendations where the party has terminated its cartel participation and co-operates fully and in a timely manner with the Bureau's investigation and any subsequent DPP prosecution of other cartel participants.
The co-operation terms correspond to the immunity programme (Leniency Program Bulletin). An applicant's co-operation may be considered a mitigating factor in plea negotiations or subsequent proceedings.
The first leniency applicant is eligible for a reduction of 50% of the fine that would otherwise have been recommended, provided that the applicant meets the requirements of the Leniency Program, including the provision of full, frank, timely and truthful co-operation. If an applicant is not the first to come forward under the Leniency Program, a recommendation for a reduction in sentence may still be available. The second leniency applicant is eligible for a reduction of 30% of the fine that would have otherwise been recommended by the Bureau to the DPP. The 30% reduction is based on the leniency applicant meeting all of the conditions of the Leniency Program to the satisfaction of the Bureau. Subsequent leniency applicants may benefit from reductions to the fine that would have otherwise been recommended, provided that they meet, continuously, all conditions of the Leniency Program. The actual amount of the reduction that a subsequent applicant is eligible to receive depends on when the applicant sought leniency compared to the second-in applicant and the quality and timeliness of its co-operation. As a rule, later leniency applicants are not eligible for a greater leniency discount than earlier applicants (Leniency Program Bulletin).
At the request of the first-in leniency applicant that is a business organisation, the Bureau will recommend that no separate charges be laid against the applicant's current directors, officers or employees, provided that such individuals co-operate with the Bureau's investigation in a full, frank, timely and truthful manner. Agents and former directors, officers and employees implicated in the offence also typically qualify for leniency, provided they offer to co-operate with the Bureau's investigation and any subsequent prosecution.
For the second and any subsequent leniency applicants, current and former directors, officers, employees and agents may be charged depending on their role in the offence. When making its recommendation to the DPP as to whether a director, officer, employee or agent should be charged, and any applicable fine or custodial sentence, the Bureau considers all of the available facts and circumstances of the individual's participation in the offence. Directors, officers, employees and agents who are charged but who co-operate fully under the Leniency Program, independently or under the umbrella of the leniency application of their employer, may be eligible to be evaluated by the Bureau as to whether they meet the conditions necessary to receive a lenient treatment recommendation from the Bureau (Leniency Program Bulletin).
If the first leniency applicant is an individual applying independently (that is, implicating his current or former employer), leniency is accorded in the same manner as if the individual were covered by an employer's leniency application.
If a business entity qualifies for immunity, all current directors, officers and employees qualify for the same recommendation for immunity if they admit their involvement in the illegal anti-competitive activity as part of the corporate admission and provide complete, timely and ongoing co-operation (Immunity Bulletin).
Past directors, officers, employees or agents who co-operate with the Bureau's investigation may also qualify for immunity, but this is determined on a case-by-case basis (Immunity Bulletin).
If a corporate applicant fails to qualify for immunity, past or present directors, officers and employees who come forward to co-operate can still be considered for immunity as if they had approached the Bureau individually. An individual can apply for immunity even if the company has not made an application or is ineligible (Immunity Bulletin) (see above, Circumstances).
Employees' (including officers and directors') interests can be protected under an entity's grant of immunity, provided the individual admits his involvement and provides complete, timely and ongoing co-operation (see above, Proceedings against individuals).
If the entity no longer employs the individual, either the:
Entity can seek to have the employee protected under its grant of immunity.
Former employee can seek immunity on his own (see above, Proceedings against individuals).
In either case, it is advisable to ensure that the former employee, officer or director has a separate lawyer to represent his interests throughout the immunity process.
As immunity is only available to the first applicant, a potential applicant should consider making an application for immunity as soon as possible after it becomes aware of its criminal conduct.
An early request for leniency should also be considered, since the fine reduction level is higher for a first leniency applicant (up to 50%) than for subsequent applicants (up to 30%) (see Question 7, Circumstances). The Bureau emphasises that timeliness of an applicant's co-operation is of paramount importance to the determination of the leniency discount it will recommend to the PPSC. The Bureau states that full and prompt co-operation at an early phase of its investigation will likely secure a recommendation for a more substantial mitigation of the sentence than co-operation at a later phase (Leniency Program Bulletin).
Where other jurisdictions are involved, co-ordinating the approach to all relevant authorities is important to ensure that amnesty, immunity or leniency is available in as many relevant jurisdictions as possible.
Initial contact should be made to the Bureau, to either the:
Senior Deputy Commissioner of Competition, Criminal Matters (for conspiracy and bid-rigging).
Deputy Commissioner of Competition, Fair Business Practices (for deceptive marketing practices).
Initial contact is generally made by the applicant's lawyer (see below, Informal guidance).
Initial contact for all applications is generally made by an (anonymous) telephone enquiry by an applicant's lawyer about whether immunity is available for a particular product or industry. The applicant must provide a precise product definition (including any sub-products) to ensure no other party has applied for immunity for the same product (FAQ Bulletin). The Bureau then makes an internal check of its open investigations, and assuming immunity is available and no other parties have already qualified for full immunity, the lawyer can seek an immunity marker (see below, Markers). Where immunity is unavailable, the Bureau advises the party of its place in line if it were to apply for leniency. A leniency applicant who receives a marker is allowed a fixed period of time to confirm its intention to participate in the Leniency Program (within four business days), during which the marker for the specific place in line is held (Leniency Program Bulletin).
See above, Informal guidance.
The applicant can obtain an immunity marker, reserving its place as the first to apply while more information is obtained to either perfect the marker or withdraw it. If immunity is unavailable and the Bureau has advised the party of its place in line if it were to apply for leniency, the Bureau will confirm the continuation of the applicant's marker when the applicant notifies the Bureau that it wishes to participate in the leniency programme. This is a paperless process, and is consistent with the US practice.
After securing a marker, an applicant must provide the Bureau with a proffer, which describes in detail the illegal activity for which immunity is sought, along with its effect in Canada and supporting evidence. Proffers are typically hypothetical and are generally provided by the applicant's counsel (FAQ Bulletin). After considering the proffer, the Bureau makes a recommendation to the DPP about whether the applicant should receive immunity (see Question 10).
The Bureau needs to know with sufficient detail and certainty (Immunity Bulletin):
The nature of any records the applicant can provide.
What evidence or testimony a potential witness can give.
How probative the evidence is likely to be.
A proffer should include (FAQ Bulletin):
A general description of the parties involved in the conduct.
The physical and technical characteristics of the relevant product.
A description of the industry involved, including pricing mechanisms and supply channels.
A market definition, including the product and geographic markets affected (only required if the conduct pre–dates 12 March 2010).
A description of the conduct, including the time period and monitoring and enforcement mechanisms (if any).
The conduct's effect, including the volume of affected commerce and pricing effects.
A general description of the witnesses and records available to assist the Bureau in its investigation.
Whether leniency has been or will be requested from other international authorities.
Immunity is granted based on full disclosure being provided to the Bureau of all relevant information. Full disclosure is an onerous obligation, involving an exhaustive internal investigation and search for information relevant to the activity. It usually consists of many interviews with current and former directors, officers and employees and an exhaustive search for, and production of, documents, records and other information relevant to the activity. The same type of information set out in the Immunity Bulletin and FAQ Bulletin is required from a leniency applicant (Leniency Program Bulletin).
Request for markers and submission of proffers may be oral and based on hypothetical disclosure through an anonymous enquiry, generally by an applicant's legal counsel (see above, Informal guidance, and Information/evidence and Question 10).
For an applicant to obtain immunity or leniency the following steps must be undertaken:
First step: initial contact. This is generally made by a party's lawyer on an oral, hypothetical basis to confirm whether immunity or leniency is available and obtain a marker (see Question 9, Informal guidance and Markers).
Second step: proffer. Within 30 days of requesting a marker (or as otherwise agreed with the Bureau), the applicant must provide a proffer (see Question 9, Information/evidence). Once the proffer requirements are satisfied, the Bureau makes its recommendation to the DPP concerning the applicant's eligibility for immunity or leniency.
Third step: immunity agreement. The DPP makes the final determination on whether an immunity agreement is offered to the applicant. The DPP uses draft immunity agreement templates, which form the basis of all immunity agreements (Adjustments Paper). A previous policy under which a provisional guarantee of immunity was granted to applicants before a final agreement was executed has been replaced by a single final agreement, which remains conditional on appropriate co-operation from the applicant.
Plea agreement (in leniency situation). The DPP has independent discretion to accept or reject the Bureau's leniency recommendations. A successful resolution of issues between the applicant and the DPP typically results in a plea agreement between the parties (Leniency Program Bulletin).
Final step: full disclosure and co-operation. After entering into an immunity or plea agreement with the DPP, full disclosure and co-operation with the investigation and any subsequent prosecution is essential (Immunity Bulletin and Leniency Program Bulletin). Parties must fully co-operate on the understanding that the Bureau will not use the information against the applicant, unless the party fails to comply with the immunity or plea agreement.
The plea (in leniency situation). Following the conclusion of the plea agreement, the DPP sets a date with the leniency applicant's counsel for filing of the indictment, statement of admissions, and sentencing submissions and the guilty plea before the court. The DPP and counsel for the leniency applicant make a joint sentencing submission based on the statement of admissions, as the basis for the plea and sentence. The statement of admissions sets out a sufficient factual basis to enable the court to make a determination that an offence has been committed (Leniency Program Bulletin).
The DPP may revoke a party's immunity if that party fails to comply with the immunity agreement, on giving 14 days' written notice (Immunity Bulletin). The Bureau discusses any deficiencies in an applicant's co-operation with the immunity agreement before recommending to the DPP that immunity be revoked (Adjustments Paper), such as:
A party not meeting its immunity agreement obligations (such as active and full co-operation).
The applicant intentionally failing to disclose all Competition Act offences (unintentional non-disclosure may lead to increased penalties, but is not grounds for immunity revocation) (Adjustments Paper).
A business entity not using all lawful measures to secure the co-operation of current or past directors, officers, employees and agents.
Immunity may be selectively revoked for parties failing to meet their obligations under the immunity agreement obligations. For example, a company's immunity may be revoked while its co-operative employees remain covered (Adjustments Paper). If immunity is revoked, action can then be taken against the party for the illegal activity. Any activity that may breach immunity conditions should be avoided, and if it occurs, should be reported to the authorities immediately to avoid jeopardising immunity. If immunity is revoked, a second applicant can be granted immunity.
The plea agreement reached with the DPP is conditional on the full and timely co-operation of the leniency applicant, and others covered under its terms, with the ongoing investigation and any related prosecution (Leniency Program Bulletin).
The scope of immunity protection is explicitly set out in the immunity agreement between the parties. It usually provides that a party is only granted immunity for offences:
That it discloses to the Bureau.
That meet the criteria for criminal offences under the Competition Act.
Following a guilty plea and conviction under the Competition Act, the DPP and defence counsel make a sentencing submission to the court. The determination of the sentence to be imposed is at the sole discretion of the court, and a judge is not bound by a joint sentencing submission. A judge will depart from a joint sentencing submission only where accepting the submission would be contrary to the public interest, and bring the administration of justice into disrepute. This is a high threshold and is intended to foster confidence in an accused, that the joint sentencing submission will be respected by a sentencing judge.
Leniency plus (known as immunity plus in Canada) is available. If a party is not the first to apply and qualify for immunity, it can seek a reduced penalty for a first offence if it is the first to disclose an occurrence of a second offence related to another product or service of which the Bureau was not originally aware. In this situation, the party is eligible for full immunity for the second offence, as well as a favourable sentencing recommendation in relation to the first offence, provided it pleads guilty to the first offence (FAQ Bulletin). In recognition of the leniency applicant's full co-operation in reporting the second offence, the Bureau typically recommends that an additional 5 to 10% be added to the applicant's leniency discount (Leniency Program Bulletin).
Immunity. A grant of immunity is not publicly disclosed. Where another party is prosecuted in a contested proceeding based on information provided by an immunity applicant, the prosecuting authority has a positive duty to disclose to that party all relevant documents in its possession, including the immunity agreement and, therefore, the identity of the applicant (Canadian Charter of Rights and Freedoms). However, the identity of an immunity applicant is not usually made public in practice. This is because most cases are resolved through plea-bargaining negotiations before formal charges are brought and disclosure requirements triggered. However, the identity of an immunity applicant can often be surmised from the circumstances of the case.
Leniency. The identity of and information obtained from the applicant are treated as confidential (Leniency Program Bulletin). See Question 10, Final step: full disclosure and co-operation.
See above, Identity disclosure.
The Bureau guarantees confidentiality except where disclosure:
Has publicly been made or agreed to by the applicant.
Is necessary to obtain or maintain the validity of a judicial authorisation for the exercise of investigative powers.
Is required by law (for example, for those who have been charged with a criminal offence (see above, Identity disclosure)).
Is for the purpose of securing the assistance of a Canadian law enforcement agency in the exercise of investigative powers.
Is necessary to prevent the commission of a serious criminal offence.
Is for the purpose of the administration or enforcement of the Competition Act. Although this appears to be a potentially broad exception to confidentiality, the Bureau has an interest in protecting immunity applicants' confidentiality and a situation where confidentiality was breached on this basis does not appear to have taken place.
Exceptions to the Bureau's confidentiality guarantee in the leniency programme are identical to those included in the immunity programme (Leniency Program Bulletin).
Where a private action for damages for anti-competitive conduct is brought under section 36 of the Competition Act, the Bureau only provides confidential documents and evidence when required by a court order (Immunity Bulletin and Leniency Program Bulletin).
The Bureau does not disclose the identity of or information obtained from an applicant to any foreign law enforcement agency:
In immunity, without the applicant's express waiver (Immunity Bulletin, Adjustments Paper, FAQ Bulletin) (see Question 16).
In leniency, without the party's consent or unless required by law (for example, in response to an order of a Canadian court of competent jurisdiction).
As part of a leniency applicant's ongoing co-operation, absent compelling reasons, the Bureau expects a waiver authorising the communication of information with those jurisdictions to which the applicant has made similar applications for immunity or leniency (Leniency Program Bulletin). Where a company has not applied for or does not qualify for immunity, to the extent that disclosure to a foreign agency is allowed by law, the Bureau does not agree to conditions (for example, in plea agreements) that limit its disclosure to another anti-trust agency (FAQ Bulletin).
Statements and information provided to the authorities are generally subject to public interest privilege or settlement privilege, and to the confidentiality provisions of the Competition Act.
No documents related to immunity negotiations have yet been produced in a foreign jurisdiction. However, US litigants have sought production of other submissions to the Bureau, including plea negotiations. According to limited case law, the privilege that protects these documents from disclosure in Canadian litigation does not appear to apply to the same degree under US law. So far, the Bureau has attempted to resist disclosure, and has indicated that it would resist disclosure of documents related to an immunity application if that were to be sought. However, there are examples of foreign courts ordering the production of submissions to the Bureau (Re Vitamins Antitrust Litigation, 2002 US Dist LEXIS 25815 (DDC)).
Statements made in support of leniency in foreign jurisdictions can be subject to discovery orders in Canada if they would not be protected by the law of privilege in either the originating jurisdiction or Canada. If the statements are protected under the law of the originating jurisdiction, the Canadian court decides whether to recognise this privilege in Canada. The degree to which a court orders production is governed by principles of comity. If the law of the originating jurisdiction does not protect the statements from disclosure and the information sought is relevant to Canadian proceedings, it is not protected from disclosure under Canadian discovery rules.
Canada is party to international agreements that provide for mutual legal assistance among international anti-trust enforcement agencies. The Bureau routinely obtains confidentiality waivers from immunity applicants, to allow information sharing with these agencies (information sharing is otherwise prohibited (see Question 14, Confidentiality requests)).
Without a waiver, the Bureau does not share the identity of or information provided by an immunity applicant (FAQ Bulletin, Adjustments Paper). However, if an applicant does not have immunity, the Bureau does not generally agree to provisions in plea agreements that limit information disclosure to other anti-trust agencies (FAQ Bulletin).
There are currently no proposals for reform.
*This chapter is an update of the 2008 edition chapter by Fraser Milner Casgrain.
Head. Melanie L Aitken (Commissioner of Competition)
Contact details. 50 Victoria Street
T +1 819 997 1208 (Criminal Matters)
+1 819 997 1231 (Fair Business Practices)
F +1 819 997 3835 (Criminal Matters)
+1 819 953 4792 (Fair Business Practices)
Responsibilities. The Bureau investigates reported criminal anti-competitive conduct and makes recommendations to the DPP on whether immunity from prosecution should be granted. The Bureau also makes recommendations to the DPP concerning sentencing and leniency.
Person/department to apply to. For criminal conduct, other than deceptive marketing practices (including price-fixing, market allocation and bid-rigging): John Pecman (Senior Deputy Commissioner, Criminal Matters). For criminal deceptive marketing practices: Lisa Campbell (Deputy Commissioner, Fair Business Practices).
Procedure for obtaining application documents. There is no official application form. Initial contacts are made orally (by telephone) and prospective applications can be discussed on an anonymous basis, usually through a lawyer (see Question 9, Informal guidance).
Qualified. Ontario Bar, 1981
Areas of practice. Competition/anti-trust law.
Qualified. Alberta bar, 2001; Ontario bar, 2002
Areas of practice. Competition/anti-trust law.