Archive for the 'Competition and IP' Category
On August 31, 2011, The Canadian Real Estate Association requested leave to intervene in the Competition Bureau’s abuse of dominance case against The Toronto Real Estate Board to support TREB.
The Competition Tribunal Act allows any person affected by Tribunal proceedings to intervene in proceedings with leave from the Tribunal.
The Tribunal has held that to grant intervenor status, the following elements must be met: (i) the matter alleged to affect the person seeking leave to intervene must be legitimately within the scope of the Tribunal’s consideration (or must be a matter sufficiently relevant to the Tribunal’s mandate); (ii) the person seeking leave to intervene must be directly affected; (iii) all representations made by a person seeking intervenor status must be relevant to an issue specifically raised by the Commissioner; and (iv) the person seeking leave to intervene must bring a unique or distinct perspective to the Tribunal that will assist the Tribunal in deciding the issues before it (see e.g., Commissioner of Competition v. Canadian Waste Services Holdings Inc., 2000 Comp. Trib. 10; Commissioner of Competition v. The Canadian Real Estate Association, 2010 Comp. Trib. 12 (order allowing National FSBO Network Inc.’s motion for leave to Intervene)).
On July 7, 2011, the Competition Bureau filed an Amended Notice of Application in its abuse of dominance case against The Toronto Real Estate Board (“TREB”).
The Bureau’s Amended Notice of Application follows TREB’s issuance of a proposed policy and rule amendments to allow its broker members to operate “virtual office websites” (“VOWs”) (secure, password-protected websites operated by real estate brokers allowing customers to perform their own MLS searches over the Internet).
The Bureau first challenged TREB back in May (see: Commissioner of Competition and The Toronto Real Estate Board – Notice of Application and Competition Bureau Sues Canada’s Largest Real Estate Board for Denying Services Over the Internet).
The Bureau has taken the position that TREB and its members control the market for residential real estate brokerage services in the Greater Toronto Area, that TREB has engaged in a practice of anti-competitive acts (board rules and policies preventing members from operating VOWs) and that those rules have resulted in a substantial lessening of competition in the residential real estate brokerage services market in the GTA (in particular, blocking real estate firms from offering innovative Internet-based services, including VOWs).
The essence of the Bureau’s abuse of dominance argument was (and remains) that TREB has used its control of its MLS system (each local real estate board in Canada operates its own MLS system) to pass rules that discipline and exclude real estate firms that want to offer VOWs.
On May 27, 2011 the Competition Bureau commenced an abuse of dominance case against the Toronto Real Estate Board (“TREB”) before the federal Competition Tribunal.
To establish abuse of dominance under the Competition Act, the Commissioner of Competition must establish that a firm (or firms) is dominant in one or more relevant markets, it has engaged in a practice of anti-competitive acts that has resulted in (or is likely to result in) a substantial lessening of competition. Where the Tribunal finds that a firm has abused its dominant position, it may make remedial orders (e.g., for the conduct to cease) or order the payment of administrative monetary penalties of up to $10 million ($15 million for subsequent orders).
In its case against TREB, the Commissioner is essentially alleging that through TREB’s MLS rules, which govern the access and use of members’ property listing information, TREB is preventing members from offering innovative non-traditional real estate services including “virtual office websites” or “VOWs” (secure password-protected websites that allow residential real estate customers to search a database containing MLS information themselves, rather than utilizing traditional bricks and mortar real estate brokerage services – for example, receiving property listing information from agents in person, by fax or by email).
With respect to TREB’s market presence, the Bureau alleges that TREB and its members substantially or completely control the market for the supply of residential real estate brokerage services in the greater Toronto area. According to the Bureau, TREB achieves its control of the relevant market through its control of its MLS system, which contains detailed member property listing information including historical sales data, by enacting and interpreting rules, policies and agreements that exclude some business models and restrict the offering of some types of innovative real estate services, including VOWs.
Specific TREB restrictions that the Bureau is challenging include rules restricting the advertising of listings, how MLS reports are provided to customers and restrictions on direct client searches of TREB MLS information.
Like its recent abuse of dominance case against The Canadian Real Estate Association, the Bureau is taking the position that TREB’s MLS system is a key (i.e., essential) input in the supply of residential real estate brokerage services, without which competing innovative brokerage models wishing to operate VOWs and other emerging Internet-based brokerage services cannot effectively compete. While arguments are sometimes made that there are competing property listing services in Canada, or that new listing services can enter or be established, the Bureau argues that the size and breadth of TREB’s MLS system (i.e., network effects) operates as a significant barrier to entry for any new property listing system that could otherwise operate as a substitute to the TREB MLS system.
With respect to TREB’s conduct, the Bureau argues that the interpretation and enforcement of TREB’s MLS rules are a practice of anti-competitive acts, the “purpose and effect of which is to discipline and exclude innovative brokers who would otherwise compete with TREB’s member brokers who use traditional methods.”
Finally, the Bureau’s view is that TREB’s MLS rules have lessened and prevented competition in the market for residential real estate brokerage services in the greater Toronto area. According to the Bureau, “TREB’s control of the relevant market through [its] MLS Restrictions gives it the power to exclude innovative brokerage models … protecting and perpetuating the static traditional brokerage model for the delivery of residential real estate brokerage services.” This, it says, denies consumers the benefits of downward pressure on commission rates and, to illustrate its point, the Bureau describes the fact that VOW brokerages are commonplace in the United States and offer rebates of up to 50% of a broker’s ordinary commissions.
Like the recently settled case against The Canadian Real Estate Association, the Bureau’s most recent challenge against organized real estate raises a number of interesting and largely unsettled abuse of dominance issues.
These include whether, and the extent to which, a real estate board can be said to control the market for a product that it does not actually supply (residential real estate brokerage services), whether the Tribunal will accept that the TREB MLS system is an essential input or facility (there has not yet to date been a decided essential facilities case in Canada) and how successful TREB will be in making arguments that it should have the right to assert control over or licence its MLS information (for example, based on intellectual property or privacy law arguments).
For a copy of the Commissioner’s Notice of Application see: The Commissioner of Competition and The Toronto Real Estate Board. For a copy of the Competition Bureau’s news release see: Competition Bureau Sues Canada’s Largest Real Estate Board for Denying Services Over the Internet.
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The Competition Bureau announced today that it has filed an application with the federal Competition Tribunal seeking, according to the Bureau, to “prohibit anti-competitive practices by the Toronto Real Estate Board that are denying consumer choice and the ability of real estate agents to introduce innovative real estate brokerage services through the Internet.”
In making the announcement, the Bureau said:
“TREB is the largest real estate board in Canada, with approximately 31,000 members. It owns and operates the Toronto Multiple Listing Service system (the Toronto MLS system), which contains current property listings and historical information about the purchase and sale of residential real estate in Toronto and the surrounding area. The vast majority of local real estate transactions make use of the Toronto MLS system, which is an essential tool for agents to help customers buy and sell homes. TREB is restricting how its member agents can provide information from the Toronto MLS system to their customers, thereby denying member agents the ability to provide innovative brokerage services over the Internet.
Today, consumers are demanding a greater selection of service and pricing options when buying or selling their homes and many agents are eager to accommodate them, said Melanie Aitken, Commissioner of Competition. Yet TREB‘s leadership continues to impose anti-competitive restrictions on its members that deny consumer choice and stifle innovation.
Toronto MLS information is controlled by TREB and is only accessible to its members. It is much more detailed than what is available on public sites, such as Realtor.ca. For example, the Toronto MLS system contains data about previous listing and sale prices, historical prices for comparable properties in the area, and the amount of time a property has been on the market.
Because of TREB‘s restrictive practices, agents do not have the flexibility to share this important data with customers in innovative new ways, such as through password protected Web sites, also called Virtual Office Web sites (VOWs). VOWs permit a customer to search a full inventory of listings containing up to date data online, before making the decision to tour a home or attend an open house. This enables customers to be more selective and focused, and agents to spend less time trying to find an appropriate property for a specific customer.
While agents can provide detailed MLS listing information not available on Realtor.ca to customers by hand, mail, fax, or email, TREB‘s anti-competitive practices effectively prevent agents from providing the same MLS listing information to customers via a password-protected Web site. As a result, there are currently no VOWs operating in the Toronto real estate market that enable customers to search a full inventory of listings.”
For the full Competition Bureau news release see:
Competition Bureau Sues Canada’s Largest Real Estate Board for Denying Services Over the Internet
For a copy of the Commissioner’s Notice of Application see:
The Commissioner of Competition and The Toronto Real Estate Board
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For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
December 29, 2010
Earlier this month, Canada passed its long-awaited anti-spam bill (Bill C-28 – the Fighting Internet and Wireless Spam Act) (“FISA”).
November 4, 2010
The Consent Agreement, which represents the settlement between the Competition Bureau and The Canadian Real Estate Association, has been filed with the federal Competition Tribunal.
September 24, 2010
Earlier today, the Competition Bureau announced that it was participating, together with members of the International Consumer Protection and Enforcement Network (ICPEN), in a joint Internet advertising sweep, focused on fraudulent and deceptive advertising on social media sites.
August 10, 2010
To be published in an all Canadian edition of Competition Policy International’s Antitrust Chronicle.
On February 8, 2010, the Canadian Competition Bureau (the “Bureau”) filed an abuse of dominance application against one of Canada’s largest single industry trade associations – The Canadian Real Estate Association (“CREA”).[1]
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
