Canada: Competition Tribunal Dismisses Commissioner’s Application Against TREB And Confirms That Abuse Of Dominance Applies Only When Anti-Competitive Acts Are Directed At A Competitor

In an unexpectedly brief decision dated April 15, 2013, the Competition Tribunal dismissed the Commissioner of Competition's application challenging certain practices of the Toronto Real Estate Board (TREB) under the abuse of dominance provisions in section 79 of the Competition Act (Act). The Tribunal dismissed the application on the basis that section 79 did not apply to the conduct at issue. Therefore, the Tribunal did not consider whether TREB's conduct is supported by a legitimate business rationale or whether it substantially prevents or lessens competition.

The decision is noteworthy for these reasons:

  • First, the Tribunal firmly rejected the Competition Bureau's assertion in its 2012 revised Abuse of Dominance Guidelines (the Guidelines) that despite the decision of the 2006 Federal Court of Appeal in Canada Pipe, anti-competitive conduct need not be directed at a competitor for section 79 to apply. The Tribunal reaffirmed the Canada Pipe rule that the impugned conduct must have had an intended negative effect on a competitor that is predatory, exclusionary or disciplinary. Therefore, for section 79(1) to apply, "the dominant firm must compete with the firm(s) harmed by the dominant firm's practice of anti-competitive acts." Given the significant penalties that can now be ordered under section 79, this clear denial of the Bureau's attempt to extend the application of the abuse of dominance provisions beyond the limits of established jurisprudence is welcome confirmation of the scope of section 79 for all Canadian businesses.
  • Second, of particular interest to trade associations, the decision provides some comfort that an association will not itself likely be exposed to significant monetary penalties under the abuse of dominance provisions where actions of the association impact the market in which members of the association compete.
  • Third, the Tribunal appears to have endorsed the use of section 90.1 to challenge trade association rules that impact competitive activities of association members.

TREB is a not-for-profit trade association that serves more than 35,000 real estate brokers and salespeople across Ontario. The Commissioner's application1 pertained to the multiple listing service (MLS) that TREB makes available to its members. MLS is an electronic database that contains current and historical information about the purchase and sale of residential real estate in Canada. The Commissioner alleged that TREB had abused a dominant position in the market for residential real estate brokerage services by establishing and enforcing rules for members' access to information on MLS – rules that hamper the effective use by certain members of electronic data services (known as virtual office website, or VOW services), thereby perpetuating the traditional "bricks and mortar" model at the expense of more efficient and lower-cost alternatives.

The Commissioner sought an order from the Tribunal to, 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. TREB amended its rules shortly after the application was filed to permit some MLS information to be made available to consumers through VOWs. The Commissioner subsequently amended her application, maintaining that steps taken by TREB to only partially open the flow of information were not sufficient to remedy the substantial lessening of competition.

In response to the Commissioner's allegations, TREB argued, among other things, that because TREB does not compete in the market for residential real estate brokerage services, it could not abuse a dominant position in that market.

The Tribunal agreed with TREB, finding that the Commissioner's application failed to establish that the required elements under section 79 had been met – most importantly, subsection 79(1)(b), which requires that the respondent be engaged in a practice of "anticompetitive acts." The Tribunal held that, consistent with the Federal Court of Appeal's position in the 2006 Canada Pipe decision, anti-competitive acts must be intended to have a negative effect on a competitor. Accordingly TREB could not be found to have engaged in an anti-competitive act vis-à-vis its members because it does not itself provide real estate services in competition with its members. The Tribunal further rejected the Commissioner's assertion based on the Guidelines that a broader scope for section 79 is supported by the acknowledgement in Canada Pipe that one of the enumerated examples of anti-competitive acts under section 78 (i.e., section 78(1)(f)) is not explicitly directed at a competitor. The Tribunal found instead that the requirement of intent to harm a competitor could be implied. The Tribunal also rejected the Commissioner's assertion that the use of the non-exhaustive term "includes" in section 78 contemplates the inclusion of additional non-enumerated conduct that is not intended to have a negative effect on a competitor. The Tribunal held that, because virtually all of the enumerated anti-competitive acts in the subsection contemplate harm to competitors, it is a necessary element.

The Tribunal also referenced subsection 79(4) as further evidence that the abuse of dominance provision applies only if the dominant firm is a competitor. Subsection 79(4) requires that the Tribunal consider "whether the practice is a result of superior competitive performance" when determining whether a practice "has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market."

The Tribunal concluded its decision with the observation that while the abuse of dominance provision did not apply, it may be open to the Commissioner to seek an order under section 90.1 of the Act on the basis that the impugned TREB rules may constitute an agreement or arrangement among members of TREB's board of directors (who are competitors) that substantially prevents or lessens competition. The Tribunal referenced this passage of the Bureau's Competitor Collaboration Guidelines in making this observation: 

Agreements between members of a trade or industry association may also constitute agreements between competitors for the purpose of section 90.1. The Bureau considers that rules, policies, by-laws or other initiatives that prevent or lessen competition substantially, and that are enacted and enforced by an association with the approval of members who are competitors, constitute agreements between competitors for the purpose of section 90.1. 

While the Tribunal was careful to point out that it had not assessed the likely merits of such a claim, it nevertheless suggests that the Tribunal believes that a trade association's rules may be subject to challenge under section 90.1 of the Act. It remains to be seen whether this view will withstand scrutiny, particularly if the organization in question has a legal personality that is separate from that of its members, and its board of directors is not composed of competitors.

The Commissioner has 30 days to appeal the decision.

Footnotes

1.  The Commissioner's application was originally filed on May 27, 2011, followed by an amended application filed on July 7, 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions