The Supreme Court of Canada recently denied leave to appeal the Federal Court of Appeal's ("FCA") decision in Commissioner of Competition v. Toronto Real Estate Board. The FCA's decision marks a significant clarification of the Competition Act's abuse of dominance provisions.
The decision confirms that a person can control a market in which it does not itself compete. This interpretation of the abuse of dominance provisions means that trade associations, as well as large customers or suppliers with significant market power, must ensure their practices do not exclude competitors or otherwise hinder competition.
The Commissioner's Allegations
The Commissioner of Competition ("Commissioner") applied pursuant to section 79 of the Competition Act—the abuse of dominant position provision—for orders prohibiting the Toronto Real Estate Board (the "Board") from engaging in what the Commissioner alleged were anti-competitive acts.
The Board, a trade association with realtor members concentrated in the Greater Toronto Area, had adopted a rule prohibiting members from posting historic residential property listing data from the Board's Multiple Listing Service online. The Commissioner alleged that the restrictions on Board members' permitted use of Multiple Listing Service listings and related data on the internet prevented or lessened competition substantially in the market for the supply of residential real estate brokerage services to vendors and purchasers in the Greater Toronto Area. The Commissioner also alleged these restrictions primarily harm Board members who conduct their business online.
Importantly, the Board does not compete with its realtor members. The Commissioner's case asserted that the Board was abusing its position as a dominant trade association to harm competition by its members.
The Competition Tribunal
The Tribunal interpreted the leading case on abuse of dominance, Commissioner of Competition v. Canada Pipe Co., to stand for the rule that, for an act to be an "anti-competitive act" for the purposes of section 79, the dominant firm must compete with the firm harmed by the dominant firm's practice of anti-competitive acts. Since the Board does not compete with its members, the Tribunal found that the abuse of dominant position provision could not apply to the Board.
The Federal Court of Appeal
On appeal, the FCA overturned the Tribunal's decision and sent the case back to the Tribunal to be decided on its merits. The FCA's key finding was that the Tribunal erred in its interpretation of Canada Pipe: a person does not need to be a "competitor" to engage in anti-competitive acts within the meaning of section 79.
Practical Implications
The FCA's decision in Commissioner of Competition v. Toronto Real Estate Board has clarified that the Commissioner may seek an order under section 79 against a firm that is not a competitor in the relevant market. In particular, trade associations and large customers and suppliers may be targets of complaints for abuse of dominant position, even where they do not compete in a relevant market.
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