The Competition Bureau Canada's updated Immunity and Leniency Programs and the liability risk in class actions

Last fall, the Competition Bureau (the “Bureau”) and the Public Prosecution Service (acting under the direction of the Director of Public Prosecutions, the “DPP”) announced revisions to their Immunity and Leniency Programs (collectively, the “Programs”). The details of these new Programs are discussed in a previous blog post. In this post, we explore the interplay between the Programs and class action suits.

Background

The Immunity and Leniency Programs have existed since 2000 and 2010, respectively, and their purpose is straightforward: To expose and thereby stop criminal anti-competitive behaviour by eliminating or reducing liability for parties that come forward and cooperate with investigations under the federal Competition Act, RSC 1985, c C-34 (the “Act”). The Immunity Program applies to offences under sections 45-49 (cartel behaviour, including conspiracy and bid-rigging) or sections 52-55.1 (false or misleading representations and deceptive marketing) of the Act, and then only to the first party to request immunity and to have sufficient information for the Bureau to refer the matter to the DPP. The Leniency Program only applies to offences under sections 45-49 of the Act, but is available to any liable party willing to cooperate with an investigation (per section 109 of the Bureau’s Technical Bulletin, the “Bulletin”).

Possible implications for class action lawsuits

A key change in the revised Programs is the Grant of Interim Immunity (“GII”). This new stage is a conditional immunity, subject to the applicant’s ongoing cooperation with the investigation (under the old Program, immunity was granted up front, and could be revoked in the event of a breach). The GII sets out the requirements for the applicant to receive final immunity (per sections 103-105 of the Bulletin), which happens only after an applicant has fulfilled all of its obligations under the GII and either:

  1. litigation is completed (including the lapsing of all necessary appeal periods); or
  2. no other assistance from the applicant is considered necessary.

Both the issuance of the GII and the final grant of immunity are at the discretion of the DPP, and early revocation is also possible. Each GII will set out the circumstances in which it may be revoked, which gives some degree of certainty, but unfortunately the GII must be in place to know this information (see section 74 of the Bulletin), which makes pre-disclosure decisions difficult.

The possibility of not receiving immunity creates an obvious legal uncertainty for the duration of the GII, which may be many years. The impact of not receiving immunity would be significant, not only for criminal liability, but also for civil liability in class actions. One must presume that the Bureau will not cease an investigation after the DPP revokes a GII, as it specifically reserves the right to “take further action against the applicant as appropriate in the circumstances” (section 107 of the Bulletin).

The Bureau fields many requests for information from class action litigants, and the good news is that it takes confidentiality very seriously. The bad news however, especially for a party denied immunity, is that once a criminal trial commences, the alleged acts will become known. This should also be considered by Leniency Program applicants, who must eventually plead guilty to an offence. Once the allegations become public, a class action is all but certain, as this recent Ontario case demonstrates.

A conviction under Part VI of the Act (which includes all of the offences to which the Programs could apply) puts a party at an even greater disadvantage because section 36(2) of the Act states that the record of proceedings in that case are rebuttable proof of wrongdoing in a civil case, and any evidence of the effects of the wrongdoings likewise become evidence in a civil case brought under section 36.

Incorporating class actions into the liability planning process

For corporations, and some individuals, any competition-related indictment or conviction makes a class action suit likely. Parties who believe they may have violated the Act face a complex series of decisions because they may only be able to speculate on the positions of other relevant parties, as well as the certainty of liability. The possibility of a class action suit only adds to this complexity, given that a party which is not criminally liable may still be civilly liable, as the Bureau itself has pointed out in a recent case.

The Bureau evidently considered civil liability in drafting the revisions to the Programs, because they include a new section clarifying that participants’ obligations to the Crown’s investigation will supersede obligations from any civil action. The Bureau may allow the party to cooperate with civil litigants when the Crown’s investigation will not be compromised, but that is discretionary (see sections 216-219 of the Bulletin).

It is currently before the Supreme Court of Canada whether the Act forms a complete code for competition offences, or whether common law remedies will remain open to plaintiffs (see Godfrey v Sony Corporation, appealing 2017 BCCA 302). In any event, statutory damages under section 36 of the Act will remain available to potential litigants. Therefore, parties considering immunity or leniency applications should seek legal advice and carefully consider the effects of a possible class action suit before taking any action.

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