Everyone knows blatant anti-competitive behavior is illegal in Canada, such as price fixing, supply restrictions, and collusion. But did you know you can be prosecuted for agreements with competitors that don’t involve those things? If you own a small business in Canada, the Competition Act is a big deal you should know about. A competition compliance program can keep you from inadvertently running afoul of the law.
What’s the Competition Act?
The Competition Act is a federal law to prevent anti-competitive business practices in Canada. It has both civil and criminal provisions. If you violate the law, you could not only face fines but end up in jail. The Competition Bureau enforces the Act.
The Act exists to uphold fair competition in the marketplace. When so-called competitors work behind the scenes to fix prices, rig bids, or otherwise manipulate the market, customers pay the price, and the entire economy suffers. The Act seeks to prevent that result.
You might be thinking, "My business isn’t engaged in price fixing or collusion. Do I need to worry about this law?" The answer is yes. Not all violations of the Competition Act are cut and dry. You can have the best of intentions and still get ensnared by the law. That’s why all small businesses in Canada need a competition compliance program.
What Happens if I’m Found in Violation of the Competition Act?
As with any crime or policy violation, the penalties for violating the Competition Act vary based on the severity of the infraction. The worst-case scenario involves implication in a cartel. The Competition Bureau defines a cartel broadly: any arrangement between individuals or businesses to impact competition.
The maximum penalty for cartel behavior? A fine of $25 million and 14 years in prison, or both, plus damage to your reputation that’s probably irreparable.
Your chances of incurring such a hefty punishment for an inadvertent violation is low. But why risk it? By implementing a good compliance program, you can leave no doubt that all your activities are aboveboard.
What Are the Characteristics of a Good Competition Compliance Program?
The Government of Canada outlines seven characteristics of an ideal competition compliance program:
Management support. A commitment to compliance must come from the top. Management must get on board before the rest of the company can be expected to.
A thorough risk assessment. A proper risk evaluation identifies business areas, employees, or recent business changes that could expose your company to compliance risk.
Policies and procedures. This means developing a specific compliance policy and, just as important, making sure all employees know it front and back.
Training and education. Writing up the policy and posting it isn’t enough. Employees should have specific training on what it means.
Monitoring and reporting. A protocol should be in place to make sure everyone in the organization is following the policies at all times.
Discipline and incentives. What happens when someone breaks the policy? Similarly, is there an impetus in place to encourage team members to toe the line?
Regular evaluations. The market changes over time, and so do many laws. Periodic check-ups help ensure your policy still comports with the current business climate.
The Competition Act is serious, but it doesn’t have to be scary. By installing a competition compliance program, you can be confident that your business is following the rules.