Canadian COMPETITION LAW

On November 2, 2011, Madam Justice Simpson of the federal Competition Tribunal (the “Tribunal”) granted leave to Realtysellers (“RS”) and The Canadian Real Estate Association (“CREA”) to intervene in the Toronto Real Estate Board (“TREB”) abuse of dominance case.

Following the Tribunal’s decision, CREA’s President Gary Morse said:

“We are pleased that the Tribunal is willing to hear our position in this matter and look forward to contributing to the Tribunal on important issues that will affect not only TREB and its members, but will also have broader implications for other Boards and Associations … The important issues under discussion may lead to a Tribunal Order affecting data sharing over the Internet which directly affects the interests of all CREA members … It is important for us, and our members, to be at the table and part of this discussion.”

CREA and RS both moved for leave to intervene in the TREB abuse of dominance case on October 18, 2011.

Abuse of Dominance

To establish abuse of dominance under the Competition Act, which is one of the Act’s civil “reviewable matters”, the Commissioner of Competition must establish: (i) that a firm (or firms) is dominant (possesses market power in a relevant market), (ii) the firm has engaged in a practice of anti-competitive acts and (iii) the practice has had, is having or is likely to have the effect of preventing or lessening competition substantially.

The Competition Bureau (the “Bureau”) commenced its case against TREB in May 2011, arguing that TREB was using its control of the MLS System to pass rules and policies restricting brokers access to and use of TREB’s MLS System.  In particular, the Bureau has taken the position that certain TREB rules regarding the use of its MLS data prevents brokers from using “virtual office websites” (secure, password protected “VOWs” to provide real estate brokerage services to their customers over the Internet).

With respect to the necessary elements to establish abuse of dominance, the Bureau is arguing that TREB is dominant (in the residential real estate services market in the Greater Toronto area), that is has engaged in a practice of anti-competitive acts (rules governing the use of its MLS data) and that its conduct has resulted in a substantial prevention or lessening of competition.

CREA’s and Realtysellers’ Intervenor Applications

The Competition Tribunal Act provides that any person may intervene in Tribunal proceedings with leave from the Tribunal, which has held that applicants for intervenor status must meet the following elements: (i) they are directly affected, (ii) the matter is legitimately within the scope of the Tribunal’s consideration (or sufficiently relevant to its mandate), (iii) the intervenor’s representations are relevant to an issue raised by the Commissioner and (iv) the intervenor will bring a unique or distinct perspective to the proceedings.

CREA sought leave to intervene to deal with, among other things, relevant market definition (product and market definition), the use and competitive impact of VOWs (and other data-sharing vehicles in Canada) and the impacts of potential remedies on CREA and its members (including on its MLS and other trademarks).

Madam Justice Simpson granted CREA leave to intervene with respect to: (i) the use and competitive impact of other (i.e., non-VOW) Internet data-sharing vehicles in Canada, (ii) the appropriate terms of use/conditions to be included in rules to implement non-VOW Internet data-sharing vehicles and (iii) the impact of proposed remedies on CREA and its members (including on its MLS and other trademarks).  With respect to process, the Tribunal granted CREA leave to intervene to review discovery transcripts and productions, call two fact or expert witnesses, cross-examine the Commissioner’s witnesses, participate in pre-hearing proceedings and make oral and written submissions.

The Tribunal also granted RS leave to intervene with respect to: (i) the cost savings and operational efficiencies of operating a virtual office (and the savings that can be passed on to consumers), (ii) the impact of TREB’s current rules and policies (including its recent VOW policy) on non-traditional brokerages that want to supply MLS information to consumers through a virtual office and (iii) the proposed order and impact it may have on non-traditional brokerages that want to provide consumers with MLS information through virtual offices.

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