Canada: Canada’s Supreme Court Denies Toronto Real Estate Board’s Application For Leave

On July 24, 2014, the  Supreme Court of Canada dismissed the Toronto Real Estate Board's ("TREB") application for leave to appeal the Federal Court of Appeal's (the "FCA") decision ordering that Commissioner of Competition's challenge to certain TREB restrictions on the use of data from its MLS system.  Accordingly, the case will again be before the Competition Tribunal (the "Tribunal") for reconsideration.

Background

As reported in our previous (February 4, 2014) blog post, in 2011 the Commissioner of Competition (the "Commissioner") brought an application to the Tribunal against TREB under the abuse of dominance provisions. The Commissioner argued that TREB's restrictive practices (in particular those relating to the use of information on its multiple listing service) prevented member agents from sharing historical property information with consumers in innovative ways (e.g., through virtual office websites).

The Tribunal concluded that TREB, as an incorporated trade association, does not compete with its own members in the real estate brokerage market and therefore cannot be found to have contravened the abuse of dominance provisions. In reaching its conclusion that the abuse of dominance provisions could only apply to the actions of  a competitor, the Tribunal relied on the FCA's decision in Canada (Commissioner of Competition) v. Canada Pipe ("Canada Pipe").

On appeal from the Tribunal, the FCA concluded that the Tribunal had erred in its interpretation of Canada Pipe. Accordingly, its interpretation regarding applicability of the abuse of dominance provisions to TREB's conduct (or the conduct of trade associations generally) was incorrect. On this issue, the FCA held that there was no support for the Tribunal's view that the abuse of dominance provisions could not apply to trade associations, in particular with respect to association rules that are binding on its members. Accordingly, the Court allowed the appeal and the application was sent back to the Tribunal for reconsideration. TREB sought leave from the Supreme Court to appeal the FCA's decision.

Conclusion

As a result of the Supreme Court decision, the case will be reheard by the Tribunal which will have to take into account the statements made by the FCA with respect to the application of the abuse of dominance provisions of the Competition Act to TREB.

Until the Tribunal rehears the case, there will continue to be uncertainty regarding how the abuse of dominance provisions apply to trade associations (which typically do not compete with their members), in particular with respect to the creation of binding rules or procedures that could impact the manner in which members compete.

For a copy of the Bureau's press release, please click here.

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