This article originally appeared in Focus On Competition/Antitrust, November 2010.
On October 24, 2010, members of the Canadian Real Estate Association ("CREA") ratified a consent agreement between the CREA and the Commissioner of Competition. After years of scrutiny and several months of negotiations, the consent agreement resolved the Commissioner's concerns that rules imposed by CREA on real estate agents who list residential properties on REALTOR.ca (formerly mls.ca, and when in use by a CREA member board an MLS® System) were anti‐competitive.
Although clearly stated in the consent agreement that "CREA does not accept the allegations of the Commissioner", the agreement imposes certain obligations on CREA that specifically address its rule making authority. Pursuant to the consent agreement, CREA can no longer establish rules that deny the ability of its members to provide sellers with listings‐only services, or that discriminate against members because they offer or wish to offer listing‐only services, including, but not limited to, any rule that:
a) prevents its members from offering a listing‐only service on a CREA member board's MLS® System or from posting only a listing on a CREA member board's MLS® System;
b) discriminates against listings‐only services on a CREA member board's MLS® System, (provided that the bare identification of just a listing on a CREA member board's MLS® System is not discriminatory);
c) prevents its members from cooperating with other members that offer listings‐only services on a CREA member board MLS® System;
d) prevents its members from:
- listing a seller's contact information in the REALTOR®‐only remarks section of the MLS® System, with instructions directing interested members to contact the seller directly,
- including, in the General Description section on the REALTOR.ca website or any other website operated by CREA or a CREA member board ("Approved Website"), a direction to visit either the REALTOR®'s or his or her brokerage's website (whichever site is included as the contact link in the REALTOR®'s contact information on the Approved Website) for additional information about the listing (without detailing the nature of such additional information), or
- displaying the seller's contact information on a website other than an Approved Website;
e) prevents its members from negotiating and contracting with a seller, in respect of the terms of payment for compensation to the co‐operating members for the cooperative selling of the property, as long as the offered compensation is not zero; or
f) conditions use of, or access to, the MLS® trademarks or a CREA member board's MLS® System on a member, or a prospective member, not offering listings‐only services.
In addition, CREA must send a written notice to all of its member boards requiring that they change their rules accordingly. CREA must also not license or continue to license the MLS® trademarks to any member board that has failed to amend its rules or adopts and/or enforces rules that are inconsistent with the terms of the consent agreement. The nature of any additional services to be provided by the listing REALTOR®/brokerage to the seller is determined by agreement between the listing REALTOR®/brokerage and the seller. As a result, homeowners ability to choose which services they require from a real estate agent when selling their home and pay only for those services is protected by the agreement.
While the consent agreement is anticipated to have an impact on the real estate industry in Canada, it also raises broader issues with respect to access to widely used technology platforms and networks which may be protected by intellectual property, to the extent that there are exclusionary rules in place. While the Competition Bureau has previously sought to pry open exclusive networks (such as those run by Interac in the 1990's), the CREA case may signal a renewed interest in opening up access to "essential facilities". In addition, the fact that the Commissioner succeeded in preventing CREA from changing its rules in the future suggests that the Commissioner might consider challenging the rule making authority of a party in advance of implementation of restrictive rules in an effort to prevent an abuse of dominance.
The legally binding consent agreement became effective on October 25, 2010 and will remain in force for 10 years. A copy of the consent agreement is available on the Competition Tribunal website at: http://www.ct‐tc.gc.ca .
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