How we ensure compliance with the law
The Competition Bureau works to ensure that Canadian businesses and consumers prosper in a competitive and innovative marketplace. We do this by investigating anticompetitive practices and promoting compliance with the laws under our jurisdiction: the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act, and the Precious Metals Marking Act.
The Bureau investigates potential instances of non-compliance to determine whether or not certain conduct contravenes one of the competition laws. An investigation does not, by itself, mean that an individual or business is not in compliance with the law. However, publicizing investigations can deter future non-compliance by demonstrating that we will actively pursue enforcement. For that reason, we may communicate the results of our investigations to the public.
- Cases and outcomes
Generally speaking, we encourage voluntary compliance and, when possible, will attempt to achieve a negotiated settlement; however, we will not hesitate to vigorously pursue enforcement action when necessary.
Encouraging voluntary compliance
A business may be found to be contravening the law before, during, or after an investigation. As a first step, we will usually try to help the business solve the problem voluntarily by making sure they know what they need to do to comply with the law, rather than seeking a court-imposed remedy.
We use a number of different “voluntary compliance” communication tools and methods to communicate with businesses and individuals who are believed to be contravening a competition-related law:
The Bureau may send an information letter to advise an individual or business that their conduct is a concern, and to emphasize their obligations under the law. These letters explain the specific requirements of the legislation but do not contain any warnings. An information letter is often used when we believe the business or individual is unaware there is an issue.
A warning letter is a formal written notice that identifies an apparent compliance issue. This letter will clearly explain the relevant law and the recipient’s responsibilities. Usually, this letter will warn the recipient that more stringent action may be considered if the conduct is not corrected or is repeated. We may also request that the recipient explain how they will remedy the situation.
If we believe that a business or individual is unaware that their conduct is cause for concern, we may contact them to schedule a meeting so that we can explain what they need to do to comply with the law. If they wish, they can discuss or explain their conduct at the meeting, but they are not required to do so.
We may conduct an on-site inspection if it appears that someone who sells prepackaged goods, textile fibre products, or items made of precious metal is not in compliance with the law (that is, the Consumer Packaging and Labelling Act, the Textile Labelling Act, or the Precious Metals Marking Act). The purpose of these inspections is to help deter future anti competitive activity. Inspectors have varying powers to examine or seize products as well as documents such as records and advertising materials.
Compliance meetings may be arranged when there are continued infractions, but there is still the possibility of compliance without resorting to more serious enforcement measures. In this case, the senior officials of a company are sent a letter asking them to attend a meeting to discuss the results of inspections, their record of compliance, and the actions the company must take to correct the situation. At the meeting, company officials may be warned that the product can be seized or held until corrective action is taken, or we may refer the matter to the Public Prosecution Service of Canada.
Corporate compliance programs
One of the most important ways that we promote voluntary compliance is by guiding businesses on actions they can take to reduce the risk of breaking the law and how to deal with anti competitive conduct by staff. In some cases, we may require that a company put a corporate compliance program in place to address our concerns.
Businesses can contact us requesting a written opinion on whether a proposed practice is likely to raise an issue under the Competition Act (fees apply). When issued, written opinions are binding on the Commissioner of Competition, provided the facts remain substantially unchanged.
Communications during inquiries
We will usually communicate with those being investigated under the Competition Act so as to promote a resolution and avoid litigation. After an inquiry is launched, we may also communicate with industry participants, complainants, and the general public. These communications do not reduce our ability to enforce the law, nor do they affect our privileges or statutory obligations.
Advance Ruling Certificates and No-Action Letters
The Bureau may issue an Advance Ruling Certificate following a merger review if we determine we do not have sufficient grounds to apply for an order to stop a proposed merger. Conversely, we may issue a No Action Letter indicating that we do not intend to challenge a merger. Advance Ruling Certificates and No-Action Letters help provide transparency about the Bureau’s merger-related decisions. (The law requires businesses to provide sufficient notice of a merger. Failure to do so constitutes non-compliant conduct that is separate from any competition issues related to the merger itself.)
On occasion, a business or individual needs to take specific action to address a violation of a competition-related law. In that case, we may offer them an opportunity to negotiate a settlement, which is less costly and more efficient than court proceedings. These settlements are known as consensual resolutions.
Consensual resolution: Civil cases
If the issue is a non-criminal (i.e., civil) violation, these negotiated settlements can take the form of a consent agreement registered with the Competition Tribunal. These are public and are published on the Tribunal’s website. Once registered, consent agreements have the force of a court order, which means that violating the agreement can result in criminal penalties, such as fines and imprisonment.
Depending on the nature of the non-compliant conduct, negotiated settlements can include various remedies or penalties. The terms of the settlement could require, for example:
- permanently ceasing a specific behaviour
- changing contractual terms
- establishing a corporate compliance program
- recalling a product
- publishing corrective notices
- selling part or all of a business (divestiture)
- paying a fine
- making restitution.
The terms of a consent agreement can be changed or rescinded if the circumstances that formed the basis for the agreement change, or if the Bureau and the business or individual negotiate a new agreement.
In some cases, we may address anticompetitive conduct by seeking an “undertaking.” This is a written promise by the individual or business in which they voluntarily agree to follow specific practices in future. The details of the undertaking will vary, depending on the circumstances. Breaching an undertaking can result in consequences such as the reopening of the investigation and, ultimately, more stringent enforcement action.
Consensual resolution: Criminal cases
Most consensual resolutions under the criminal law provisions of the competition laws happen as part of the Bureau’s Immunity and Leniency programs. These programs offer incentives for individuals to help authorities prosecute unlawful conduct under the Competition Act. The programs are administered jointly by the Competition Bureau and the Public Prosecution Service of Canada (PPSC), which is responsible for prosecuting federal offences.
Under these programs, the first person to tell the Bureau about anti-competitive and unlawful activities, as well as individuals who provide evidence that results in the case being referred to the PPSC, may receive immunity from prosecution or lenient treatment.
To receive immunity, the individual must cooperate fully with our investigation and any subsequent prosecution. Individuals who are not eligible for immunity but who provide full, ongoing cooperation and who agree to plead guilty to an offence under the Competition Act can apply for lenient treatment in return for their cooperation.
In criminal cases, we may recommend that the PPSC ask the court for a prohibition order, which prohibits the parties from continuing or repeating the offence. It can be part of a sentence imposed by the court when parties have been found guilty, or issued without a finding of guilt if the parties have done something that furthers the commission of an offence.
In the case of a conviction, the order will include terms requiring the parties to take specific actions to stop or avoid repeating the offence. These can include, for example, establishing a corporate compliance program, which may include training for company staff and executives on competition law. Individuals who violate a prohibition order can face fines or imprisonment up to five years.
Litigation is used when we cannot resolve a case consensually or when consensual means are inappropriate. Litigation may involve criminal or civil proceedings before a court or the Competition Tribunal and can result in product seizures.
In criminal cases, we refer matters to the PPSC to conduct either litigation or consensual proceedings on our behalf. The Bureau works with the PPSC to address violations of the criminal provisions of competition laws, and to deter serious and deliberate misconduct by businesses and individuals.
Litigation may also include court injunctions issued under the Competition Act. These may be used to stop a current activity or to prevent future action, such as a proposed merger that is likely to result in competitive harm. We may also apply to the Competition Tribunal for an injunction to remedy anticompetitive practices. In addition, products, labelling, packaging, or advertising material may be seized or held.
- Creating an effective corporate compliance program
- Communication of confidential information under the Competition Act
- Communication during inquiries
- Requests for information from private parties in proceedings under section 36 of the Competition Act
- Process to obtain orders (A review of section 11 of the Competition Act)
- Search and seizure (bulletin on sections 15 and 16 of the Competition Act)
- Conduct regulated by other federal, provincial, or municipal laws (bulletin on “regulated” conduct)
- Production of electronically stored information
- Competition and Compliance Framework, chapter 3