Canada: Federal Court Of Appeal Allows Competition Bureau Appeal In Toronto Real Estate Board Case

On February 3, 2014, the Federal Court of Appeal (FCA) ruled that the Competition Tribunal (Tribunal) erred in dismissing the abuse of dominance case brought by the Commissioner of Competition (Commissioner) against the Toronto Real Estate Board (TREB). The FCA's ruling hinged on its finding that the Tribunal incorrectly interpreted its 2006 decision in Canada (Commissioner of Competition) v. Canada Pipe Co. and, consequently, the application of the abuse of dominance provisions of the Competition Act (Act). Accordingly, the FCA sent the Commissioner's application back to the Tribunal for redetermination.

Background

The Commissioner brought an abuse of dominance application under subsection 79(1) of the Act against TREB, a trade association, on the basis that TREB restricts the manner in which its member real estate agents can disseminate information from the multiple listing service (MLS) it controls. More specifically, the Commissioner alleges that members cannot post MLS data online, which the Commissioner alleges has the effect of substantially lessening competition.

On April 15, 2013, the Tribunal dismissed the Commissioner's application, without considering the merits, on the basis that subsection 79(1) of the Act cannot apply to TREB because it does not compete with its members. The Tribunal concluded that because TREB does not compete with its members, TREB's rules cannot have an intended negative effect on a "competitor," as required by Canada Pipe.

For more detail on the original Tribunal decision in this case, please see our earlier article.

Decision

The FCA disagreed with the Tribunal's interpretation of Canada Pipe as requiring the anti-competitive practice described in paragraph 79(1)(b) of the Act to be directed against a "competitor of the person who is the target of the Commissioner's application." The FCA found that, given its factual context, its decision in Canada Pipe did not intend to preclude abuse of dominance orders against persons who control a market "otherwise than as a competitor."

By way of example, the FCA noted the Commissioner's argument that a person who does not compete in a market could nevertheless control that market by controlling a significant input to competitors in the market, or by making rules that effectively control the business conduct of those competitors.

Without ruling on the facts alleged by the Commissioner and TREB (since the Tribunal's decision was based on a matter of law and did not deal with the facts), the FCA sent the case back to the Tribunal for reconsideration.

Conclusion

The FCA decision in TREB casts uncertainty over who can be the subject of an abuse of dominance application by the Commissioner. It suggests, at a minimum, that trade associations can be targets of abuse of dominance cases. The uncertainty created by this decision is troublesome, particularly in view of the fact that administrative monetary penalties (AMP) of up to $10 million are now available in abuse of dominance cases. On its reconsideration of the case, it would be beneficial for the Tribunal to provide guidance on this issue.

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