Originally published in Blakes Bulletin on Competition,
Antitrust & Foreign Investment, May 2011
On May 27, 2011, the Competition Bureau announced that it had
filed an application with the Competition Tribunal in response to
certain practices by the Toronto Real Estate Board (TREB) that the
Bureau alleges are anticompetitive. In particular, the Bureau has
alleged that TREB has restricted the ability of real estate agents
to introduce innovative real estate brokerage services through the
Internet, thereby harming consumers.
The application was brought under the Competition
Act's abuse of dominance provisions, which provide for
non-criminal sanctions where a dominant firm has engaged in a
practice of anticompetitive acts that are likely to prevent or
lessen competition substantially. The Bureau alleges that TREB,
which is the largest real estate board in Canada and owns and
operates the Toronto Multiple Listing Service system (the Toronto
MLS system), currently restricts and prevents brokers from sharing
detailed MLS system data with customers in new ways, such as
through secure, password-protected "virtual office
websites" (VOWs). The Toronto MLS system has information about
specific properties that is not available on other websites, such
as www.realtor.ca, including data about previous listing and sale
prices, historical prices for comparable properties, and the amount
of time a property has been on the market, all of which may inform
consumers' home purchase and sale decisions.
According to the Bureau, VOWs would permit customers to conduct
their own searches for, and review information relevant to, the
purchase and sale of homes in the GTA, without the personal
assistance or direct intervention of a broker. Currently, brokers
and their staff are limited to obtaining such information from the
Toronto MLS system themselves and providing it to their customers
by hand, email or fax.
The Bureau's application notes that real estate boards and
associations in other Canadian jurisdictions, such as Nova Scotia,
allow their members access to and use of their MLS information to
provide Internet-based services and, in the United States, such
access to and use of MLS information is commonplace. According to
the application, brokers that use such innovations enjoy cost
savings that enable them to compete more effectively against
traditional brokers, in addition to providing consumers greater
convenience and choice of services.
The Bureau's application seeks an order from the Tribunal
that would, among other things:
prohibit TREB from directly or indirectly enacting,
interpreting or enforcing any rules that exclude, prevent or
discriminate against TREB member brokers who wish to use the
information in the Toronto MLS system to offer services over the
Internet, such as through VOWs;
direct TREB to implement such resources and facilities as the
Tribunal deems necessary to ensure the operation of VOWs or similar
services by, or on behalf of, member brokers; and
grant such further and other relief as the Tribunal may
Filing an application against TREB in this matter is consistent
with the priority the Bureau has placed on pursuing abuse of
dominance cases. Although this application is separate and apart
from the consent agreement that was entered into last fall by the
Canadian Real Estate Association (CREA) and the Commissioner of
Competition, which resolved the Commissioner's concerns that
the MLS rules imposed by CREA constituted an abuse of CREA's
dominant position in the provision of residential real estate
services, it demonstrates the Bureau's continued interest in
abuse of dominance cases, particularly in connection with real
estate brokerage services. For additional details regarding the
Commissioner's proceedings against CREA, please see our October
2010 Blakes Bulletins: Competition Bureau Update on MEGs Consultation, Leniency
Bulletin and CREA Settlement and Competition Bureau Releases Updated Service Standards for
Mergers; Announces Definitive Agreement with CREA.
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