Archive for the 'Associations' Category
The British Columbia Real Estate Association will be hosting its 2011 Instructor Development Workshop in Whistler from September 22nd to 25th 2011, for instructors of REALTORS in British Columbia.
Steve Szentesi will be facilitating a competition law workshop (amendments to the Competition Act and developments in the first two years in force) on Sunday, September 25th.
For more information about the IDW workshop, event schedule and speakers see BCREA’s website:
BCREA – Instructor Development Workshop
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In a significant recent decision by the federal Competition Tribunal, the Tribunal granted leave to the Used Car Dealers Association of Ontario (the “UCDA”) to make a section 75 refusal to deal application relating to a refusal by the Insurance Bureau of Canada (the “IBC”) to supply data to it for one of its products for its members.
This recent case, reasons for which were issued on September 9, 2011, is significant, in that the UCDA was seeking leave to make its refusal to deal application in light of a longstanding adverse decision – the Warner music case.
(Leave from the Tribunal is a prerequisite to making refusal to deal applications to the Competition Tribunal, as well as private applications under the price maintenance (section 76) and exclusive dealing/tied selling/market restriction sections (under section 77).)
In its earlier Warner decision, the Tribunal held that licenses to use and reproduce intellectual property (music in Warner) was not a “product” for section 75 of the Competition Act and also that a license could not be in “ample supply” (two of a number of requirements under section 75), given that a license holder has a right under intellectual property legislation (e.g., the Copyright Act) to decide whether or not to license its IP to third parties.
In light of Warner, it has generally been thought that refusals to license intellectual property could not be the subject of refusal to deal applications under section 75 (or at minimum, that arguments would need to be made as to why Warner should not apply to a particular case, and that this could reduce the likelihood of success of section 75 applications in the context of intellectual property refusals to deal).
On September 2, 2011, the Competition Bureau released its “ex-post assessment” of its 2007 Self-Regulated Professions Study (Self-regulated professions – Balancing competition and regulation (December, 2007)).
According to the Bureau, its new Study “surveys and assesses developments that have taken place relating to recommendations made in [its] 2007 Study” and “provides an overview of the progress made since 2007” to the earlier recommendations made by the Bureau.
In 2007, the Bureau released a Study on the rules and regulations governing five Canadian professions (real estate agents, pharmacists, lawyers, accountants and optometrists), intended to study the impact (or lack of it in some cases) of competition on the self-regulated professions in Canada.
The Bureau’s 2007 Study examined six aspects of self-regulation – in particular, restrictions on entering a profession, mobility, business structure, scope of services/practice, advertising and pricing and compensation – and made 53 recommendations to the various professions in an effort to try and enhance competition in those professions.
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.
In a very interesting refusal to supply case currently before the federal Competition Tribunal the Used Car Dealers Association of Ontario (“UCDA”) is attempting to obtain leave from the Tribunal for the re-supply by the Insurance Bureau of Canada (“IBC”) of data used in one of the UCDA’s products (Auto Check – which provides used vehicle accident history searches to its dealer members).
According to the UCDA, the data previously supplied by the IBC is a “critical input” for its Auto Check product and is, as such, seeking a Tribunal order under the refusal to deal and price maintenance provisions of the Competition Act for the IBC to recommence supply (both sections 75 and 76 of the Act, refusal to deal and price maintenance, allow the Tribunal to order suppliers to re-supply where the elements of those sections are met).
Not surprisingly, the IBC argues that the UCDA’s leave application should be dismissed, including based on the 1997 Warner case. In Warner, which involved a rather rare application by the Competition Bureau under section 75 (refusal to deal) in the context of Warner Music’s refusal to grant music copyright licenses to its competitor BMG Canada for its competing Canadian mail order record club business, the Tribunal accepted Warner’s arguments that section 75 did not apply in a refusal to license context.
In particular, the Tribunal held that licenses are not a “product” for the purposes of section 75, that there cannot be an “ample supply” of legal rights over intellectual property which are “exclusive by their very nature” and that there cannot be “usual trade terms” for licenses when they may be withheld – all requirements to establish refusal to deal under the Act.
While the Tribunal went on in Warner to concede that a copyright license could be a “product” for under other sections of the Act, it relied largely on principles of statutory interpretation to decide that section 75 was not intended to encompass refusals to license intellectual property.
Since it was decided, Warner has generally been viewed as an obstacle to parties seeking to invoke section 75 in a refusal to license context. To decide otherwise has been seen by some as potentially leading to a “compulsory licensing regime” under the Competition Act. Others, however, have criticized Warner as having been wrongly decided.
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 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 its 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.
In its amended Application, the Bureau reinforces its earlier abuse of dominance arguments against TREB by arguing that TREB’s new VOW rules are a further anti-competitive act that would continue to discriminate against brokers wishing to offer VOWs (conduct must be predatory, disciplinary or exclusionary toward a competitor to constitute an anti-competitive act under section 79 of the Act).
In particular, the Bureau argues that by imposing limitations on the types of information available on VOWs that are not in place for traditional brokerages, including historical sales information, which can currently be provided by traditional means (e.g., hand, e-mail or fax), TREB is discriminating against brokers that want to operate VOWs.
In addition to proving that TREB engaged in a practice of anti-competitive acts, the Bureau will also need to show that as a result of TREB’s conduct, competition has been (or will likely be) prevented or substantially lessened, which involves considering whether a target’s market position will likely be maintained or enhanced as a result of its actions.
In this regard, the Bureau makes a number of new arguments including that TREB’s VOW rules would continue to require customers to contact a member broker personally for key information including historical sales data and that TREB’s VOW rules are “vague and ambiguous” so would “impede the entry of innovative real estate models”.
In essence, the Bureau argues that TREB’s proposed VOW rules would operate as a further barrier to entry for real estate brokerages wishing to operate VOWs using TREB’s MLS data, reinforcing the market position of traditional brokerage firms.
Interesting aspects of this case include whether the Bureau will be able to prove that TREB is dominant in the market for residential real estate services in the GTA (given that TREB, as a trade association, does not actually provide residential real estate brokerage services), whether TREB’s MLS system is indeed the essential facility the Bureau argues it is (the Bureau’s case turns in large part on the argument that TREB’s MLS system is an essential input into the provision of real estate services in the GTA, though there has not yet been a decided essential facilities case in Canada) and whether TREB’s rules constitute an anti-competitive act for section 79 of the Act (given the limited case law to date under the modern abuse of dominance provisions, and no direct precedent for the Bureau’s position on anti-competitive acts).
For a copy of the Bureau’s amended Notice of Application see:
Commissioner of Competition and The Toronto Real Estate Board – Amended Notice of Application
For a copy of the Bureau’s Notice of Application see:
Commissioner of Competition and The Toronto Real Estate Board – Notice of Application
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Somewhat eclipsed by the recent Competition Bureau case commenced against Canada’s largest real estate board, the Toronto Real Estate Board, are signs that the Bureau may also intervene to stem complaints that provincial boards and associations are thwarting flat-fee listing agents from posting Canada-wide listings.
The Globe and Mail has reported that:
“A fresh fight is brewing in the home sales industry, as the associations that represent real estate agents try to enforce restrictions on new, lower-cost competitors in an effort to prevent them from doing business across provincial boundaries.
The competitors offer low-cost, flat-fee listings on Realtor.ca, and were under the impression they would be able to accept clients from across the country after the real estate industry settled a case with the Competition Bureau last year that allowed them entry to the market.”
According to the Globe, some Canadian real estate firms are saying that they are being forced out of business by local real estate boards interpreting provincial legislation “in a way that prevents them from competing with commission-based agents” and that they have asked the Competition Bureau to intervene in this fresh fight.
The key issue is whether, as a result of the recent CREA settlement with the Bureau, real estate agents operating and licensed in one province should be permitted to post listings from other provinces on Realtor.ca (and the extent to which the voluntary trade associations to which they belong – i.e., the various local real estate boards and associations – should have the power to restrict such Canada-wide listings).
Some boards and provincial regulators have taken the position that the agents posting Canada-wide listings are trading in real estate and, as such, must be licensed in each province from which they are posting listings (i.e., an agent licensed in Ontario should not, for example, be permitted to post listings on Realtor.ca from Manitoba).
While the issue may seem straightforward enough when it comes to dealing with the local boards and associations, which do not have any legislative power to regulate broker and agent activities (local real estate boards and associations are non-statutory voluntary trade associations), it may prove to be a very different matter when the agents face the provincial regulators.
This is because the “regulated conduct defence” (“RCD”) may operate to preclude Bureau enforcement action where a legislatively authorized provincial regulator limits or restricts the ability of agents licensed in one province to post listings on Realtor.ca from another province in which they are not licensed to operate. In particular, the RCD can operate to exempt conduct that would otherwise be subject to the Competition Act where it is either mandated or authorized by valid provincial or federal legislation.
As such, while the Bureau may decide to take steps against local boards for restricting members from offering Canada-wide listings on Realtor.ca, or take the position that the terms of the recent settlement between CREA and the Commissioner are not being complied with, it may have no power to proceed against provincial regulators that discipline or sanction agents for not complying with provincial rules regulating real estate agents (e.g., for unlicensed trading in real estate).
For more see:
Competition Bureau Asked to Settle New Fight Over MLS Listings
Competition Bureau “Regulated” Conduct Bulletin
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Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
