On September 18, 2014, the Canadian Competition Bureau (“CCB”) released a draft update of its Corporate Compliance Programs Bulletin (“Bulletin”) for public comment. The Bulletin provides guidance on developing programs to prevent or minimize the risks of contraventions of the Competition Act, as well as three other federal statutes, and retains many of the features of the previous version which was issued in 2010. These include several “essential elements” that should be incorporated into every program, namely management involvement; compliance policies and procedures; training and education; monitoring, auditing and reporting mechanisms; and disciplinary measures and incentives for compliance. However, the Bulletin is significantly longer than the previous version, with the addition of the following elements:
- Emphasis on a risk-based approach: The Bulletin stresses that an assessment of the potential risks faced by a company will allow it to properly design compliance strategies that address those risks. In this regard, among the “essential elements” that should be incorporated into every program, the Bulletin names a corporate compliance risk assessment and recommends that a designated compliance officer work with management to identify key legal risks so as to best develop and tailor its compliance program to its specific needs. The CCB has also flagged specific risk factors, including (i) whether staff participate in trade associations with competitors, (ii) whether the business regularly recruits employees from competitors, (iii) whether markets are characterized by a small number of competitors, (iv) whether it is common practice to have, or it is easy to gain, competitor intelligence within the sector, (v) whether joint ventures among competitors are common, and (vi) whether competitors of the business are also its customers.
- SMEs: As part of its effort to provide a “comprehensive guide” to developing credible and effective compliance programs, bearing in mind that each organization is different, the CCB specifically calls out the small and medium enterprise (“SME”) sector in the Bulletin. While acknowledging that larger businesses generally need more comprehensive programs, the Bulletin makes clear that SMEs are expected to implement and follow their own programs that are commensurate with their size and business activities. Further, the Bulletin notes that while resources will inform the tailoring of a program for each individual business, resource constraints in no way negate the necessity for such programs. Rather, they may heighten the importance of compliance programs in which management takes a leading and active role.
- Monitoring the compliance programs of trade associations and other organizations: In addition to referring to trade associations among key risk factors, the Bulletin recommends that employee participation in trade associations be limited to those that have implemented their own credible and effective compliance programs. More broadly, the Bulletin recommends that the organization encourage third parties “such as trade associations and those acting for the company”, to address risks associated with their operations including, potentially, monitoring those third parties and recommending that they implement their own credible and effective compliance programs.
- Ongoing assessment: Another new “essential element” in the Bulletin is the development of a “Compliance Program Evaluation”, which according to the CCB entails continuous assessment of an organization’s compliance program and monitoring of developments in the law and business activities to identify emerging risks, evaluate the program’s effectiveness, and revise the program as needed.
- Practical Examples: On the whole, the Bulletin reflects an attempt to provide guidance to all organizations, regardless of size and other circumstances, and as such tends to avoid specific, definitive recommendations. However, the CCB has included several examples throughout the Bulletin and a new appendix containing hypothetical case examples of compliance issues, which is an improvement on the previous version in terms of offering practical, meaningful guidance to its audience.
Absent from the Bulletin is specific commentary on the CCB’s consideration of a corporate compliance program in carrying out enforcement activities under the Competition Act. In this regard, the Bulletin states generally that the CCB may take into consideration the existence of a credible and effective compliance program as a mitigating factor when making recommendations to the Public Prosecution Service of Canada, including in the context of the CCB’s Leniency Program, when determining whether to pursue a matter along the criminal or civil provisions of the Competition Act, or in assessing the value of administrative monetary penalties in a reviewable matter. Further, while the decision to implement a compliance program is generally voluntary, the CCB in some circumstances may recommend or request that a program be established in the context of a prohibition order, probation order, consent agreement or alternative case resolution. The CCB may also request that an independent compliance monitor be appointed to monitor the program’s implementation and operation. In general, the Bulletin’s the emphasis on tailored, internally developed compliance programs for organizations of all sizes, and vigilance in assessing their effectiveness (as well as monitoring their trade associations and partner organizations), makes clear that the CCB has high expectations for proactively managed, effective compliance programs. This approach is consistent with the Bureau’s efforts to intensify its enforcement activities in recent years, including by pursuing maximum administrative monetary penalties under various provisions of the Competition Act. If finalized in its current form, the Bulletin will put organizations on alert that the responsibility for mitigating compliance risks and developing such a program falls squarely to the organization itself. The full text of the Bulletin, which is open for public comment until November 17, 2014 is available at http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03778.html