Canada’s Competition Bureau published draft guidance this week that describes new developments in how the Bureau defines effective compliance programs—and it’s significantly more supportive of good-faith compliance efforts than anything the Department of Justice has verbalized lately.

The Competition Bureau is Canada’s independent law enforcement agency, responsible for investigating anti-competitive practices and promoting compliance with the laws under its jurisdiction. Its draft guidance, issued Sept. 18, describes measures that Canadian companies should consider to prevent or minimize their risk of non-compliance with Canadian laws. It also provides tools to help companies develop their own compliance programs.

During remarks at the Canadian Bar Association’s Annual Competition Law Fall Conference in Ottawa, Commissioner of Competition John Pecman said the change that “will likely garner the greatest attention is the addition of an incentive program, which would see a discretionary reduction in fines for companies that qualify for leniency and that are found to possess a credible and effective corporate compliance program.”

He added that the size of the recommended reduction in fines would be at the discretion of the Bureau. “We believe that this is an important incentive—one that will reward companies with existing credible and effective compliance programs and encourage companies without such programs to put one in place,” he said.

“While this incentive is an important tool, it is by no means a ‘free pass’ for companies simply putting a compliance program in place,” Pecman added. “This incentive will only be available for companies that have applied for a leniency marker under the Leniency Program.”

Additionally, the mere existence of a corporate compliance program alone will not merit qualification for this incentive. “In order to qualify, companies will be required to demonstrate, based on a thorough review, undertaken by the Bureau, that the compliance program in question was in fact credible and effective.”

To aid in this effort the Bureau will soon be establishing the role of a chief compliance officer. Reviewing the compliance programs of companies that are seeking a reduction in fines will be among the responsibilities of this position.

Compliance Elements

The guidance lays out the following seven fundamental elements that all credible and effective compliance programs should incorporate:

Management involvement and support;

Corporate compliance risk assessment;

Corporate compliance policies and procedures;

Training and education;

Monitoring, auditing and reporting mechanisms;

Consistent disciplinary procedures and incentives for compliance; and

Compliance program evaluation.

The guidance further provides specific suggestions on how to satisfy each of the compliance elements. It also offers hypothetical case studies illustrating how the Bureau may consider the credibility and effectiveness of a compliance program. “We have done this to increase transparency and provide more predictability for parties,” Pecman said.

In particular, the guidance focuses on hypothetical case studies that small and medium-sized businesses could face. “I believe this will be an important resource for smaller businesses that may be less familiar with the potential risks of non-compliance,” Pecman added.

Compliance Responsibilities

During his remarks, Pecman said the role of a chief compliance officer “should be both independent and empowered by senior management and/or their board to deliver on their role.” The Bulletin provides suggestions on the appropriate levels of seniority and independence for those serving in this role, and provides recommendations for how companies can foster a speak-up culture without fear of retaliation, he said.

Regarding risk-based assessment tools, compliance programs should accurately reflect the risks posed to the company in question. “A corporate compliance program that is broad, non-specific and does not accurately reflect a company’s risks for non-compliance is not a credible and effective program,” Pecman continued. “Likewise, neither is a program that is too narrow in its scope.”

“A credible and effective program must be reflective of the company, its role in the market place, and the associated risk,” he said. The guidance recommends that compliance officers work with senior management to perform a risk assessment for their company and then tailor their compliance program appropriately.

The guidance further encourages companies to address risks posed by third parties, such as suppliers. “It’s incumbent on businesses to ensure that the companies with which they do business are not putting them at risk of non-compliance,” Pecman said.

Comments on the draft guidance are due by Nov. 17.

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