Bulletin on Corporate Compliance Programs

Previous     Table of Contents     Next

Part V - Consideration Given to a Corporate Compliance Program

---

A) Generally

The existence of a program does not immunize businesses or individuals from enforcement action by the Commissioner or from prosecution by the DPP. However, in determining the most appropriate means to resolve cases, the Commissioner and the DPP may give weight to the existence of a credible and effective program.

Moreover, where a business has a program in place and a contravention of any of the Acts occurs nonetheless, a program may still be considered credible and effective, where it can be demonstrated that it was reasonably designed, implemented and enforced in the circumstances.

B) Specifically

1) Where Senior Management Is Involved in the Breach

If the senior management of a company either participated in or condoned the conduct in breach of the Acts it would be apparent to the Bureau that management's commitment to compliance was not serious and the program was neither credible nor effective. Knowingly contravening the law despite the implementation of a program will be considered an aggravating factor for the individuals when the Commissioner assesses whether to recommend that charges be laid against the individuals. In such cases, the Commissioner would also recommend that charges be laid against the company.

2) Corporate Compliance Programs Implemented as a Sham

If a program is a sham and used only to conceal or deflect liability, this also may be considered an aggravating factor for sentencing purposes or any other form of a resolution, including administrative monetary penalties. In such circumstances, the conduct of the parties in a business will be closely examined.

3) Impact on the Bureau’s Decision to Pursue Competition Act Matters Under the Civil or the Criminal Regime

The false or misleading representations and deceptive marketing practices provisions of the Competition Act, which prohibit making a false or misleading representation to the public for the purposes of promoting a product or a business interest, may be pursued either civilly or criminally if there is evidence that the conduct was engaged in knowingly or recklessly. The Bureau’s decision of whether to pursue a matter under the criminal or the civil track may take into account, among other things, the existence of a credible and effective program as well as whether it is in the public interest to recommend to the DPP to lay criminal charges against a company or an individual.

4) Due Diligence Defence

For certain false or misleading representations and deceptive marketing practices provisions under the Competition Act and certain provisions of the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act, a company may argue that it had exercised due diligence to prevent the conduct.

Although an in-house program is not, in and of itself, a defence to allegations of wrongdoing under any of the Acts, a credible and effective program may enable a business to demonstrate that it took reasonable steps to avoid contravening the law. In this regard, such a program may support a claim of due diligence.

5) Alternative Case Resolution ("ACR")

Depending on the circumstances, conduct contravening the Acts may be resolved without fully contested proceedings. The Bureau’s effort to increase compliance without the need for contested proceedings is supported by the availability of ACRs in the form of both suasion and consent. ACRs include consent agreements issued under sections 74.12 and 105 of the Competition Act, consent prohibition orders issued by a court²², undertakings, the publication of corrective notices, information contacts, information letters, warning letters and compliance meetings.

Generally, the Commissioner will be more inclined to consider an alternative form of resolution to litigation where the business can demonstrate that:

• it terminated the conduct in breach of the Acts as soon as it was detected;
• it attempted to remedy the adverse effects of the conduct;
• the conduct was contrary to corporate policy in existence at the time of the contravention; and
• the contravention occurred at a lower level in the business and was not carried out or endorsed by senior management.

Although an in-house program is not a prerequisite for ACRs in either civil or criminal matters, the existence of a credible and effective program may enable a company to satisfy the above-noted requirements²³.

If it is determined that an alternative form of resolution is appropriate to settle a matter, and a credible and effective program is not already in place, the Commissioner will, whenever appropriate, require the implementation of such a program as part of the resolution. Where a program is already in place, the Commissioner will, whenever appropriate, require the business to review its program and to make the appropriate changes to prevent future repetitions of the conduct in question.

When the implementation of a program forms part of the resolution of a matter, the business may be required to demonstrate to the Commissioner that its program is likely to prevent conduct in breach of the Acts. As a starting point, businesses may wish to refer to Part IV - Basic Requirements for a Credible and Effective Corporate Compliance Program to assess whether the proposed program is likely to be credible and effective.

6) Immunity from Prosecution and Leniency

Businesses or individuals involved in activities that may violate the criminal or penal provisions of the Acts can, in certain circumstances, approach the Bureau and request immunity from prosecution in return for co-operating with the Bureau’s investigation and any ensuing prosecutions. Under the Bureau's Immunity Program, the Commissioner recommends that the DPP grant immunity to the first party that comes forward and satisfies the identified criteria²⁴. The DPP however has ultimate discretion to accept or reject the Commissioner’s recommendation.

A program is not a prerequisite for requesting immunity; however, without it the impugned conduct might not be detected early enough to enable the company to qualify for the "first-in" immunity protection from prosecution. Subsequent parties to come forward are able to request other types of lenient treatment granted by the DPP, such as reduced fines in return for co-operation with the Bureau and the DPP. The timing of a request for lenient treatment is thus important. If a party approaches the Bureau early in the investigation, it is more likely to provide assistance and as a result, receive greater recognition in the form of a lesser sentence.

Before recommending immunity or leniency, the Bureau requires, among other things, that the company take effective steps to terminate its participation in the illegal activity. In this regard, a credible and effective program will improve a company's ability to demonstrate that it has satisfied this criterion and will assist in ensuring that it adopts policies and practices that conform with the law in the future.

7) Sentencing and Civil Remedies

For criminal offences, the presence of a credible and effective program may be seen as a mitigating factor warranting a reduction in the penalty that the Commissioner would otherwise recommend to the DPP for submission to the court. However, the DPP has ultimate discretion to accept or reject the Commissioner’s recommendation .

In reviewable matters, the Commissioner may apply to the court for a remedial order. As with criminal offences, the existence of a credible and effective program may enable a business to demonstrate mitigating conduct, including evidence that the anti-competitive activity is contrary to its policies, to the actions and to the statements of senior management, and that it was terminated as soon as it became known to senior management. Depending on the circumstances, the existence of a credible and effective program may have a positive impact on the magnitude of the remedy sought by the Commissioner. For example, it may reduce the amount of the administrative monetary penalty sought by the Commissioner in a deceptive marketing practice case.

---

²² Section 34 of the Competition Act allows for a court to impose prescriptive terms.

²³ Other criteria will also be taken into account. For a more detailed discussion of the Bureau’s approach regarding case resolution, see supra, note 6.

²⁴ The Federal Prosecution Service Deskbook, supra, note 20, provides the relevant information regarding immunity agreements granted following the violation of the other three statutes enforced by the Commissioner.