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Focus on Competition Law Compliance – Competition Bureau Releases Draft Updated Bulletin on Corporate Compliance Programs

Date

October 8, 2014


Now, more than ever, it is critical for Canadian businesses to deploy an effective competition law compliance program. In a speech last month, Commission of Competition John Pecman reiterated that the best way for a company to reduce its risk of contravening the Competition Act is to put in place a credible and effective compliance program.[1] Concurrently, the Competition Bureau released an updated draft of its Corporate Compliance Programs Bulletin, which sets out the essential components for such a compliance program.[2]

A notable update to the draft Bulletin is the addition of an incentive program for companies that qualify for leniency under the Bureau’s Leniency Program and can demonstrate that their compliance program was credible and effective. These companies may receive a discretionary reduction in fines.

Other benefits of a credible and effective in-house compliance program include the following:

  • early detection of anti-competitive conduct by the company, thereby allowing it to make a timely application for immunity or leniency;
  • knowing how to deal appropriately with the execution of a search warrant at company premises;
  • consideration by the Bureau when it is deciding whether to pursue a matter under the Act’s criminal or civil provisions when both are available; and
  • allowing the company to qualify for favourable treatment in sentencing or administrative monetary penalties.

The draft Bulletin identifies seven basic elements of a compliance program that are fundamental to a program’s success:

  1. Management’s involvement and support: This aspect includes assigning responsibility for the program to a high-level executive (e.g., a compliance officer) who is independent and empowered to implement the program.

  2. Risk-based corporate compliance assessment: The program should be tailored to accurately reflect the risks posed to the company. This is a new addition to the Bulletin.

  3. Development of policies and procedures that are most relevant to the business, operations and employees’ daily activities: For example, if a business often submits bids, a list of “dos and don’ts” and “red flag” issues for bid submissions should be included in its policies and procedures.

  4. Training and education: A company should choose the most effective method for training and communicating to relevant management/employees based on the company’s size and compliance risk assessment.

  5. Monitoring, auditing and reporting mechanisms: The program must allow the company’s compliance officer to investigate issues and take the steps necessary to stop ongoing and prevent future contraventions.

  6. Disciplinary procedures and incentives: This category includes explicitly stating that disciplinary actions (suspension, demotion, dismissal or legal action) will be taken when a manager/employee fails to comply or when a manager fails to take reasonable steps to prevent/detect misconduct.

  7. Evaluation of the effectiveness of the program on a regular basis: This process includes monitoring new developments in the law and business activities to determine their impact on the program. This is also a new addition to the Bulletin.

The draft Bulletin now also includes a set of hypothetical scenarios providing additional guidance on the Bureau’s analytical approach to compliance-related issues.

Conclusion

With its updated draft Bulletin, the Competition Bureau continues to emphasize the importance of corporate compliance programs. Contravention of the Competition Act can have serious consequences for companies and individuals, including prison terms, multi-million dollar fines and monetary penalties, damages from private party and class action lawsuits, prohibition from bidding on public contracts, negative publicity and disruption to operations resulting from a Bureau investigation and/or court proceedings. It is therefore crucial for businesses to ensure that their employees and executives are familiar with and understand how the Act applies to their business activities. It is critical that any company operating in Canada develops, updates and deploys an effective and credible compliance program.

[1] http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03815.html
[2] http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03778.html. Open for consultation until November 17, 2014.

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